US Borrowers May Receive Payment Breaks To Deal With Coronavirus
13 Mar 2020
Approx Reading time: 3 minutes
- Multiple banks have already offered dedicated assistance to customers that have had their personal finances impacted by the ongoing coronavirus threat.
- UK and Italy have already provided repayment holidays, and experts believe US policymakers may follow suit if the virus continues to spread.
- Expected relief policies include repayment holidays, an increase in credit line limits, and waivers on cash advance fees, all for a temporary period of time.
Due to the ongoing coronavirus threat, consumers in the US could find it increasingly difficult to pay their bills in the coming weeks as the markets continue to slow down. Hence, banks and policymakers have started developing strategies to ensure consumers are well equipped to deal with any liquidity crunch they may face. According to an email sent by Citi to its credit card customers regarding measures taken by the bank
to deal with the impact of the coronavirus, customers would have access to their accounts 24/7. In case customers lose out on some or all of their regular income, a likely outcome of temporary suspension of business activity, the bank has pledged support and dedicated programs to assist its customers. Impacted Citi customers could call on the number displayed at the back of their credit cards to seek assistance, and the bank will address those concerns. Some assistance actions the bank could take include increasing the customer’s credit line or forbearing collections, according to the bank’s notice. PNC Bank also circulated a similar notice to its customers this week, encouraging impacted customers to contact the bank for assistance. Other banks are likely to follow and provide similar dedicated assistance programs to their customers. Mortgage owners in the US have yet to receive any relief, as has been provided to mortgage borrowers in the UK
and Italy in the form of repayment holidays, to ease financial pressure on consumers that could potentially suffer (and are currently suffering) from lower-than-usual incomes due to business closures. Possible policy actions that may be taken in the US for customer relief include repayment holidays, waiver on cash advance fees, and a temporary increase in credit lines offered to customers. Regulators have already encouraged financial service providers to take necessary action and provide customers financially impacted by the virus with dedicated support. Repayment holidays could help customers that have had their incomes severely reduced to avoid missing due payments and protect their credit scores, according to experts. According to economists, the US economy could shed jobs in the coming months, especially in industries like travel, tourism, and manufacturing. Those employed in the service industry could have working hours cut due to a decline in the number of customers. At this time, the unemployment in the country stands at around 3.5% as of February, but economists predict this can go up to 4% by the end of this year. However, experts are also hoping a fiscal stimulus provided by the federal government could help mitigate issues pertaining to employment and income. US President Donald Trump has supported a payroll tax cut as well as an immediate measure to increase disposal income held by weekly earners. In 2010, the Obama administration had gotten Congress approval for a 2% payroll tax cut for one year, which was extended by another year in 2011. However, experts are also encouraging households to devise a contingency plan in case they experience a decline in personal income. The most important step households should take at this time, according to experts, is save more than usual by reducing the consumption of non-essential products and services.