While the COVID-19 cloud grows ever darker, spending habits have shifted and people are finding themselves having to buy online and have goods delivered to the door rather than hopping in the car or going around the corner to pick something up at the supermarket. Thus, there are many credit mistakes to avoid during the COVID-19 Pandemic and several are highlighted in this article.
Online Shopping Habits During Covid-19
Through clever marketing and advertising, many businesses on the web have ensnared the public, convincing many that COVID-19 is just a temporary diversion and once things get ‘back to normal’ debts could be repaid, and life can go on as before.
By now, we all know that this is indeed not the case and that many a spender is currently mired in debt, and jobless, due to the economic crunch COVID-19 brought down on the world.
While companies are offering debt relief, with so many people facing and experiencing financial setbacks in the current climate, credit might be offered over and above what means we have to pay back. People are maxing out their credit cards because they have no option. The bottom line for most households is they have to eat; while in others it might be a matter of maintaining a luxury lifestyle lived before the pandemic hit.
As discussed in an oecd.org article the COVID-19 crisis has accelerated “an expansion of e-commerce towards new firms, involving a long-term shift of e-commerce transactions from luxury goods and services to everyday necessities.”
Don’t Accept a Moratorium
One of the first recommendations is to say no to the option of a moratorium should your bank offer it, unless you have urgent medical expenses due to an accident or injury that cannot be helped. A moratorium is when the bank allows a freeze on repayments for a period of time during unforeseen circumstances that may affect people. However, this break from paying does not come interest-free. On the contrary, interest rates may be higher after the relief is lifted.
Don’t Ignore Bills
The next bit of advice is NOT to ignore bills. This is something many did before the pandemic hit anyway, but now is the time to take the proverbial bull ‘by the horns and be responsible for paying debt on time, rather than brushing it aside ‘for later. Remarkably, many Accredited Debt Relief were posted by people who did just that and expected a miracle.
Avoiding a Credit Trap
In normal cases, a person would be anxious about their increased reliance on credit cards causing credit scores to decline. The article on the LiveMint.com website highlights several credit traps people can easily fall into and which they advocate you should avoid at all costs (excuse that pun).
Say No and Remain Disciplined
Binge purchasing is another thing that people stuck at home may be prone to engage in. With little or nothing to do while the office puts you on leave as it tries to figure out how to get work done from home, while conforming to government laws pertaining to social distancing. Hence, one may be inclined to buy into the marketing tactics of smart sales people out there.
Of course, online marketing will flourish in these times, simply because minimal contact with other people is the rule. Marketing companies will go out of their way to encourage spending and will even drop goods off at your front door, making online shopping a fun and novel way to spend money. Thus it is of paramount importance to discipline yourself to avoid these credit mistakes during the COVID-19 Pandemic.
Mithilesh Singh is a digital marketing consultant, blogger and founder of Tech Preview. He loves to assist freelancers, start-ups, and small businesses to use their website and products to drive more leads, traffic, and sales for enhanced revenue and growth.