COVID-19 Debt and Credit Card Relief

Last Updated: 6/23/2021
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The COVID-19 crisis has badly shaken the U.S. economy, sending a ripple effect through households around the country. The unemployment rate in the U.S. has soared since the crisis started, as more than 50 million Americans have lost their jobs or seen their hours reduced. Unemployment leads to financial hardship, especially if you owe on debts such as credit cards, personal and student loans, car loans and medical bills. But debt relief is available regardless of what type of debt you have or how much you owe.

How to Pay Off Debt During and After the Coronavirus

A young women can be seen from overhead looking at her bills

Before tackling your debt, make sure you’re signed up for any financial assistance you qualify for, including unemployment benefits and relief from other lost wage resources. Many industry associations are raising money for people who are struggling, so be sure to take advantage of any help you can.

Once you’ve secured all available sources of income, you can plan how you’ll cope with both COVID-19 and credit card debt, along with any other debt you owe.

Here’s how to get started:

1. Calculate Your Monthly Minimums

A couple calculates how much money they owe

Review each of your credit cards and loans and find out your monthly minimum payment. That’s the lowest amount you can pay in order to keep your account current. Continue paying at least that much if you can, and consider putting all of your accounts on autopay. Not having to remember many different due dates makes money management less stressful, and it helps you avoid late fees.

Ideally, you’d pay more than the minimum to clear the debt faster and lower your credit utilization ratio (which affects your credit score). But if you can only make your minimums right now, that’s OK. The important thing is to keep paying and avoid default, which could hurt your credit.

Remember that your housing payments and utility bills should be paid first. Put your money toward your mortgage or rent before paying on your debts. If you can’t make those payments, find out whether your state has suspended evictions or is otherwise providing rent and mortgage relief.

2. Ask Your Creditors for Help

A man calls his creditor to get help paying his bills

Contact your lenders if you can’t afford your monthly minimums. They know that borrowers are in crisis because of the pandemic, and many are offering assistance, such as suspending payments or arranging new payment plans. Although calling your creditors may seem daunting, think of yourselves as being on the same side. Yes, they want to get paid. But it’s in their interest to work with you and make your payments affordable rather than seeing you go into default.

If you still feel overwhelmed, block out a specific period, and call as many creditors as you can. When that block is over, reward yourself with an episode or two of your favorite show or another fun activity. If you haven’t made it through the list, repeat the same process tomorrow. You’ll probably find that the conversations were a lot easier than you were expecting, and you’ll be relieved to have taken control of your debt.

3. Ask Friends and Family for a Loan

A mother and daughter talk about debt and how to help

Perhaps you’re waiting for your unemployment benefits to come in, or you expect to be called back to your job. If your financial hardship is temporary, you may want to ask relatives or close friends for a short-term loan to get through the next month. Talking with loved ones about money can be difficult, but people are eager to help when they know you’ve hit a rough patch. Still, it’s tough to ask for money, so use the following tips to start the conversation:

Be honest. Honesty is key to having a productive discussion about your finances. Explain your situation, whether you've had your hours cut, lost clients or have become unemployed. They should understand the full picture before committing to a loan.

Ask for a specific amount. Review your budget and bills and figure out exactly how much you need to borrow. Giving a hard number will enable your loved ones to decide if they can afford to help you right now.

Set a realistic timeline for when you'll pay them back. Don't over-promise on a repayment timeline. Take a clear look at your finances and work prospects, and build in a buffer for the unexpected. No one knows precisely what the economic recovery will look like, so you have to allow for what you don't know. The more realistic you are about when you can repay, the less likely conflicts are to arise.

Put the agreement in writing. Once you've agreed to an amount and when and how you'll repay your loved one, put the details down on paper and sign it, and make sure you both have a copy. That way, if any issues come up, you can refer back to the terms you agreed on.

Should You Consolidate Your Debts?

Woman considers consolidating her debts

If you're paying on several debts right now, especially ones with high-interest rates, you may want to consider consolidating them. Debt consolidation is simply taking out a new loan or credit card and using it to pay off your other debts, leaving you with one monthly payment.


Pay less interest. Taking out a personal loan or using a credit card with a zero-interest introductory period can help you save money on interest since you're paying on a single debt rather than several accounts with varying interest rates.

Deal with one creditor instead of many. Rather than fielding statements from multiple companies, you communicate with a single creditor.

Get simplified payments. With just one loan to repay, managing your monthly payments becomes much more comfortable, especially if you set up autopay for that account.


Zero-interest periods expire. If you don't pay off your balance before your zero-interest introductory rate ends, you'll pay full interest on the remaining balance, which could make your monthly payments overwhelming again.

Pay interest on personal loans. While you'll likely get a lower interest rate on a personal loan than you would a credit card, you're still going to pay interest on the principal. You can look for a secured loan backed by collateral such as your car or another account, to get a lower rate. The trade-off is that if you don't pay the loan, the bank can take those assets.

Pay additional fees. You may have to pay an origination fee on a personal loan or balance transfer fees with credit cards.

When to Consider a Debt Management Plan

A couple considers a debt management plan

If you can't pay your debts and a consolidation loan or credit card isn't an option, you may want to contact a debt management company. These non-profits provide debt counseling services and will negotiate your monthly payments with your creditors. They may be able to secure a lower interest rate or other reduction that makes it easier for you to repay your debts. A debt management company can't guarantee that they'll be able to lower your debts since creditors aren't obligated to accept their offers. But they may be able to help you get some relief.

You can schedule a free consultation with a credit counselor to learn whether your debts qualify and how much the organization will charge to manage your debts. Debt management is a form of consolidation, since you'll make one monthly payment to the counseling organization, and they will use those funds to pay all of your creditors. Like a consolidation loan, debt management simplifies the repayment process and may reduce the amount of interest and fees you'll pay.

A debt management plan may be a fit for you if you have unsecured debt such as credit cards, personal loans, medical bills and payday loans. Keep in mind that your credit score will likely drop when you first start a debt management plan because you will pay your creditors less than you had initially agreed. However, your score may benefit long-term because you'll make payments on time, and your credit usage and debt-to-income ratio will go down.

You can’t negotiate student loans, mortgages or home equity loans through debt management, but you can contact your lenders about relief options. Income-driven repayment or a temporary deferment may be available for your student loans, and your bank or lender may be willing to adjust your home loan repayment schedule.

Take Action

There are many relief options for debt during coronavirus, so if you’re struggling, don’t lose hope. The best thing you can do for your finances is to honestly assess what you owe and what you can pay right now. If you can’t make the payments on your own, don’t hesitate to ask loved ones and credit counselors for help with making sense of your debt, especially during this volatile time.

About the Author

Casey Morris is a finance and tech journalist who writes for MoneyGeek. She has written for Forbes Asia, The Christian Science Monitor, The Washington Post and a number of finance publications and institutions. Morris is a graduate of Columbia Journalism School.