Applying for a New Credit Card During the Coronavirus Pandemic? Here's What You Need to Know
The entire world is battling a severe health issue that has affected the day to day lives of people all across the globe and affected 1 million people. The outbreak is not just impacting the health of people but also their financial well-being. Industries have been shut down, manufacturing processes have been halted, more and more people are losing their jobs every day which will eventually land the entire world into a vicious trap of recession.
Many small businesses are suffering extensive revenue losses coupled with a lack of manpower. The impact of this situation has increased the demand for credit not just in the UAE, but all across the globe. People around the world are compelled to opt for credit in order to make ends meet due to the coronavirus pandemic.
For all the people who are looking forward to applying for a credit card, during times of such uncertainty we will help you to understand and decode the various strategies to ensure a financially safe future for you and your loved ones.
But before we go ahead and shed light on these strategies, let us see if it is the right time to avail credit?
Is the COVID-19 Outbreak the Right Time to Apply for a Credit Card?
Credit cards one of the most widely used financial tools in the 21st century. Financial experts and economists believe that credit cards are suitable options to help an individual counter the strokes of financial hardships. However, they might be hazardous to your financial well-being in the long run.
Several credit card providers and financial institutions have come up with relief programs during the Coronavirus pandemic. If you are in very urgent need of credit, you might go for a 0% APR credit card to save on the applicable rate of interest. If your credit history is excellent it is actually a viable idea to opt for 0% APR credit cards to counter financial instability and repay them later.
An important point to be kept in consideration here is that one should repay the entire balance at once within the validity of the promotional financing scheme that saves over the payable interest. There is no point in using the credit card if the cardholder is unable to repay the debt timely, as it will add on to the interest over the payable amount. The real viability of using a credit card is only possible if you manage to save over the additional payment in the form of interest by repaying the debt timely.
Points to Ponder when you Apply for a New Credit Card
It is always beneficial to go ahead with a 0% APR credit card to manage, however, there are various important points to be kept in consideration.
Reduce Your Monthly Expenses
Cardholders that have opted for credit to manage emergency expenses, it is extremely important to avoid the increasing amount of debt in the form of the principal amount along with interest. Cardholders should avoid unnecessary expenses by canceling unnecessary vacations, movies, renovations, clothing, etc. basically everything that is avoidable. Amid the coronavirus pandemic, it is our responsibility to save money as well as stock essentials to make sure that we’re safe and secure indoors.
Replace Lost Income
Quarantine and self-isolation are some of the most effective preventive measures against the coronavirus pandemic that have saved millions across the globe from getting infected from the deadly virus. The quarantine is an excellent time for self-realization and introspection along with spending time with family and loved ones. However, the quarantine during the COVID-19 outbreak can be an amazing time to replace lost income by getting indulged in freelance jobs or maybe simple online part-time jobs. These jobs are ideal to keep you busy and occupied amid the coronavirus pandemic along with providing a secondary income that helps to reduce credit card debt and thereby the financial burden over the cardholder.
Repay Existing Credit Card Bills First
Before you go ahead and use your newly obtained credit card to pay off for your current expenses it is vital to repay existing credit card debts. During stressful times like the COVID-19 outbreak, it is important to stay on a neutral financial side by building up emergency funds. The emergency funds might be in the form of credit cards or personal loans.
However, if your budget is disturbed and it is difficult for you to manage the repayment of credit cards one can go ahead with minimum repayment options. Making minimum credit card payments will ensure that a heavy interest rate is not being applied on your credit card which not only adds financial burden but affects your credit rating.
Another option to manage existing credit card payments is to go for a balance transfer facility. The balance transfer facility allows users to transfer existing credit card bills to new cards which helps them repay debts easily.
In a Nutshell
Last but not least it is extremely vital to build an emergency fund to counter uncertainties on the trail of life. Credit cards are undoubtedly the fastest and the most convenient medium of availing credit not just in the UAE, but across the entire globe.
Financial experts advise building up emergency funds of approximately six months' worth of expenses to ensure that you and your loved ones do not struggle amid stressful financial situations.