Money·3 min read

What the Coronavirus Could Mean for Your Wallet

July 27, 2020

A LOT has changed in the last four-plus months...from what we know about COVID-19 to its effects on jobs, the economy, and stocks. And how the gov is responding to all of it. Here’s the latest on how the coronavirus may be affecting your wallet.

You may be getting (another) check from the gov. In March, President Trump signed a $2 trillion relief bill into law. It included things like $1,200 checks, an extra $600 per week in unemployment benefits, and help for small businesses. But Americans said ‘gimme, gimme more.’ So House Dems revealed a plan in May. Then Senate Republicans said ‘how about this instead?’ and unveiled their own proposal in late July. Both include another round of $1,200 checks for individuals. TBD on the final details of a package that passes both houses.

It could cost less to take on new debt. In rough economic times (and yes, we’re officially in a recession), the Federal Reserve can lower interest rates to encourage people to spend, invest, and borrow money – and boost the economy. In March, the Fed cut rates to almost zero. And has since said they’ll probably stay there for a while. That could help you get better borrowing terms when you buy or refinance a home. And maybe a slight discount if you carry a balance on your credit card or other variable-rate debt.

Oh, and if you’re planning to take out new student loans (grad school, anyone?)...federal rates for the 2020-21 school year are at record lows.

You might get a break on your current debt. Lenders have gotten more flexible to help take some financial pressure off people who are struggling. If you already owe Uncle Sam back for college, you probably don’t need to make payments (including interest) until October. If you’re struggling with credit card, personal loan or mortgage payments, call your creditor. They might be willing to waive fees or defer payments.

Related: How to Pay Off Credit Card Debt

Your utility bills might be higher. More time at home probably means spending more on electricity and AC. One study found people who WFH are paying $121 more for utilities than usual. Pro tip: set your ceiling fan to spin counterclockwise in the summer to push cool air down and give your AC a break. Air-drying your laundry, running the dishwasher at night (during off-peak hours), and plugging your electronics into advanced power strips can also help to lower your bills.

It might be harder to get a new job or raise. After hanging around 3.5% (a 50-year low) at the end of 2019 and beginning of 2020, the unemployment rate has been spiking. As of last month, we’re at about 11%. Meaning there’s a lot of competition for jobs that are available. Even if you’re happy where you are, you may be stuck with the same paycheck for a while. During recessions, companies may be more likely to protect their bottom lines by freezing raises and bonuses.

theSkimm: COVID-19 continues to impact, well, everything. Including the economy. While lawmakers decide the gov’s next steps, focus on what you can do. Like asking your lenders for help if you need it and finding easy ways to trim your budget. If you can afford to give your emergency fund some love, do it. So you’ll be prepared no matter what happens next.

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