What do you do when a global pandemic strikes and wreaks havoc on your finances? You were already living paycheck to paycheck, then all heck breaks loose, and things get even tighter. Your employer reduces your hours, your significant other loses their job, and your household expenses have increased. The family is home all day, so you’re paying more for necessities like electricity, gas, water, and food. You’ve emptied your emergency savings and are hanging on by a thread.
This scenario has been true for many Americans since the coronavirus pandemic started. Unprepared for the wrath of a health crisis, they maneuvered the best they could to survive. Most ended up relying on credit cards to get by. While this concept helped, it left another problem – overwhelming debt. Now, American consumers have more debt than they can afford, ruined credit, and another stress added to their plates. Cornhusker Advisors saw this coming and were prepared to step in and assist.
Buy Now Pay Later
When you don’t have enough income to cover basic needs, it’s common to turn to credit cards. Though you know you’re responsible for the balance plus interest, you can get what you what now and pay for it later. So, you begin racking up those balances to get what you and your family need and pay whatever you can each month on the card.
Minimum Payments Not Enough
Most credit cardholders know that paying the minimum monthly amount each month is ideal. So, they submit the $30-50 required to avoid a late payment or penalty. The only problem is, the minimum amount isn’t enough to put a dent in the balance. Cardholders end up paying on the interest while the principal balance remains the same. Ultimately, they watch a lot of money going down the drain, which could be put to better use.
Ruined Credit Causes More Problems
Rising credit card usage leads to a higher balance; a high balance increases credit utilization and debt to income ratios, ultimately resulting in a weakened credit rating. What was quickly discovered was how this would impact everyday life. A poor credit history made it difficult and more expensive to do everything.
Homeowners that were struggling to keep up with mortgage payments tried to find relief through refinancing. However, a lower score meant that banks would either deny their requests or make them pay heavily through higher interest rates and down payment requirements.
Renters in need of affordable housing were turned away. Landlords run credit checks and see red flags that caution them against taking an unnecessary risk. The few who could find a rental property had to pay a higher security deposit or live in low-income, high-crime neighborhoods.
Getting a job was also challenging. As some employers review financial history, many eligible applicants were declined simply because of a negative rating.
Life simply got more expensive as everything from utility services to car insurance required decent credit for affordable rates. Applicants with a poor credit history had to pay higher premiums or provide a larger deposit to receive products and services they needed.
Debt Consolidation Provides Relief
Cornhusker Advisors understood the vicious financial cycle the pandemic created for millions of Americans. That’s why the company goes to great lengths to provide relief. Specializing in debt consolidation loans for unsecured credit cards, they worked diligently to help customers find the appropriate solution. By consolidating their high-interest credit card accounts into one, affordable and manageable loan, customers could get back on track. They stop the negative ratings, save money on interest, and have a better opportunity to develop a repayment system that gets them out of debt for good.
No one likely imagined that the coronavirus pandemic would come and wreak havoc on the economy. Unfortunately, millions of people are impacted by these changes. Turning on their survival skills, they used credit cards as a means to cover necessities. Consequently, it resulted in ruined credit and an increased cost of living that only makes life more stressful. Thankfully, agencies like Cornhusker Advisors stepped in to provide relief.