The 3-month payment holiday that banks and credit providers offered their customers was a lifeline for many people. But as you come to the end of this period, it is time to look at your complete money picture and consider the debt solutions available to you.
A payment holiday means that for the period agreed with your credit provider (usually three months) you don’t have to pay your monthly loan instalments. Because it is an agreement with your credit provider, there are no penalties on these missed payments and they don’t influence your credit score.
The downside, however, is that in most cases the credit provider will keep adding interest and monthly admin fees to the outstanding balance on your loan. As a result, not only will your loan term be three months longer than originally agreed, but your debt will cost you more because of the interest and fees that accrued during the payment holiday.
Against this backdrop, your first step should be to fully understand the status of your loan at the end of the payment holiday. Give your credit provider a call or send an email to ask for a detailed explanation of your outstanding balance and how much longer your loan term has become.
Get this information for all your loans, and then go back to your budget. Plug your new loan information into your planning, and then take the time to consider all your expenses again. You need a complete and accurate picture of your finances before you decide on the way forward.
Here are some of the debt solution options you could consider:
It is going to be tough for most of us to regain our financial balance while we are still dealing with Covid-19, but we can do it by sticking to healthy money habits and making smart money decisions. One of the smartest money decisions you can make at the end of a payment holiday is choosing the debt solution that best meets your needs.
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