Stop Paying Your Credit Card Bills
This is the perfect time to stop paying your credit cards. We are in the middle of the greatest pandemic in a century. You might be working. You probably aren’t. Even if you have an income, it is precarious. The government is promising to give you $1200 someday in the future and your bank a few billions. You need the money. American Express can fend for itself.
You could just stop paying without telling them. It’s certainly an option. However, society MIGHT not collapse and if you want credit after this is over, you should probably make a good faith effort.
This is the letter that I am sending to Barclay’s, Capital One, First Bank, etc., etc.
To whom it may concern,
Due to the coronavirus crisis and the loss of income, I will not be able to maintain my payments at this time. I am asking for forbearance. Please suspend all interest and late fees until this crisis has reached a conclusion. Once the crisis is resolved, I will again be happy to make timely payments. Should your company choose to require payments during the greatest pandemic since 1918, I will be forced to stop paying altogether.
Feel free to cut-and-paste for your purposes.
Given the choice between forbearance and non-payment, your credit card company should accept forbearance. Of course, you might have to wait a few months for them to come to their senses. They are currently under the delusion that this will pass quickly. Just read any one of those emails with the subject “Covid-19. Support: Here’s how [CREDIT CARD] can help.” They aren’t offering to help. They are apologizing for the call volume being so high (more on that later). They are giving you the chance to pay your bills online and set up automatic payment. That’s not help. That’s a sales pitch. Still, it’s not like you have the money to pay them in the first place.
Currently, they are in denial but eventually they will need to accept that payments aren’t coming and you are at least offering to pay at a later date. “You’re not asking for loan forgiveness …you’re saying, ‘Can I have these payments delayed 60 or 90 days and basically add them to the end of the loan and extend them out?’ What you’re asking for is a grace period.” This should be reasonable. More importantly, some banks are beginning to see reason. Bank of America is offering to refund overdraft fees and not report its customers to credit bureaus. Capital One offers financial relief options. Citi is offering hardship programs but also credit line increases.
Of course, they aren’t just offering these options in their covid-19 emails. They aren’t automatically putting everyone in the forbearance pile. They ard doing it on a case-by-case basis, meaning that YOU need to contact them directly and ask explicitly.
When you contact them, you should follow one basic rule.
Don’t call them.
Don’t play their game.
You probably know what will happen should you use the phone number. First, you will be using your phone as a phone. Second, you will be confronted with an automated service that will not give you the option of forbearance. It may even make it difficult for you to talk to human. Once you finally convince the automated service that you need to talk to an actual person, the hold music will come on. You will be told that there is exceedingly high call volume. More hold music will play. It will be interspersed with promotional material. You will be told that they care about you. You will be told that they take the coronavirus seriously. The voice will apologize for the high call volume. It will suggest you hang up and call later.
They want you to give up. You should give up. These corporations make their phone number the primary contact because they want to make it difficult. Normally, we accept this corporate behavior. Credit is unfair. The interest rates are ridiculous. It’s impossible to pay them off with minimum payments.The card that offered us an opportunity to pay off our debts only to hit us with a 23% interest rate after the initial year is not going to make things easy.
Still if you are stubborn, you will eventually hear that sweet sound of an official “Hello. American Express. How may I help you?” greeting. You will be angry and exhausted. You might be distracted. You will have listened to every hold message at least ten times. There are high call volumes and many closed offices. The staff members may be working from home.
You will try to be calm and you might even succeed. The customer service representative will hear that anger. The customer service representative will understand that anger. The representative has been hearing from people for weeks and the call volume just spiked. You’re angry and bitter. The customer service representative is losing it. You will have to use all of your resources not to end up in a screaming match. Even if the CSR can help you, they might not be able to give you the forbearance you need. Most likely they will try to sell you on a higher interest rate. Yet, if you are persistent and patient, you might just get that forbearance.
After this ordeal, look up the number for the next card and repeat. If you are the average American, you have 2–3 cards and if you don’t call yourself upper middle class you probably have 5–6 cards, certain that you could use the next card to pay off those other cards. You took that no interest deal and put $5000 on one card. That card was amazing for a few months. You even dreamed of having all of your credit on one card and paying it off. Only something happened. You got sick. Your cat got sick. You fell behind on the rent. You had to move your mom to a nursing home. Try explaining that situation when the CSR asks you why you maxed out five credit cards.
You can repeat the ordeal until you have talked to every credit card company or you can send an email. They don’t have to respond to it, but it will be in their records. You can’t say you didn’t warn them. Of course, some creditors offer no contact information except for the phone number. Well, in that case you tried. They will contact you.
Ultimately, everyone is going to have to adjust to this new world. You have bills that you need to pay lest they cut you off. Verizon is one of them. Legislation is keeping the electric company from turning off service but you should pay if only to avoid the massive bill that will come when they can turn it off. Some states are proposing bills to freeze rent for three months, but your landlord can still make life difficult.
With credit cards, you don’t have to pay. You never had to pay but you were building credit and keeping up to date. Bankruptcy would have ruined your credit for a decade. Charge offs would have ruined it for seven years. You wanted to make the monthly payments. You wanted your credit to improve. You wanted to pay these cards off and even planned on the month when the money didn’t leave your bank account.
That time is over.
This pandemic is not ending soon.
You are not going back to work. The credit card companies don’t need your money. They never did. Obviously, they could charge late fees and interest. They could report you to a credit agency but really, how much damage can they do? If the economy was strong and no one was out of work, you could worry about the damaged credit rating. Now, you will be one of millions who suddenly stopped paying. If you actually keep paying, you will run out of money faster. By August your credit will still be ruined and you will feel foolish for trying to keep up the payments in the early months.
If for some reason I’m wrong and everything is stabilized by June, then good job everyone. We did it. Celebrate. If your credit cards did not give you forbearance, feel free to curse my name. You got two months of late fees to deal with. Regardless, you have more important things to worry about than your reputation with American Express or Barclay’s.