Since the beginning of the COVID-19 pandemic, more than 40 million Americans have applied for unemployment benefits. The unemployment rate for May 2020 got to 13.3%, down from April’s historic 14.7% unemployment rate. Although the rate went down, the unemployment numbers are the worst since the Great Depression.
What to do if you’re unemployed
After an unexpected snapback in May, there has been a slowdown in the labor-market as coronavirus resurged in recent weeks. As the pandemic stretches on, many Americans are struggling to come up with cash. While another stimulus package is pending in Congress, the outcome is still unclear. With the additional $600 of unemployment benefits set to end on or before July 31st. People will need to find ways to come up with the money, and where they can get the money will depend on their situation.
Join a credit union
They are similar to a bank, but it’s not exactly a bank. Like banks, a credit union can accept deposits and offer loans. One difference is that credit unions are member-owned cooperative unions, while banks are commercial and for-profit enterprises. During the same duration, the average for an unsecured fixed-rate three-year loan at a credit union was 9.28% while a bank loan was 10.2%. While people must be eligible to join a credit union, it is not as difficult as people think. Some credit unions are open to specific professions, or relatives of a member.
Utilize credit cards for bills
Another option is to use the available credit on credit cards to help pay bills instead of taking loans out of a retirement account. While nearly half of U.S. adults had credit card debt before the pandemic, almost 23% have added to it. People should reach out to their lenders and see what help is offered. A lender may allow a skipped payment or lower interest rate, and it won’t affect credit scores. Providers may have programs that help pay for large purchases or give access to cash that comes with lower rates and a more predictable payment schedule. Taking a cash advance on credit cards should be avoided, as the interest rates are around 25%.
Understand and budget monthly expenses
Getting a better understanding of monthly expenses is essential when times become abnormal. People need to take stock of expenses and discover what’s necessary and what isn’t. There are several thrifty ways to save on the things you want to keep in life. Swapping cable providers for cheap streaming services, ditching a credit card with a high annual fee, and canceling annual memberships are just a few ways to save money. Normal financial wisdom does not always apply in abnormal times, like during this pandemic. If finances get tight, it might be time to stop aggressively paying down a loan.
Millions of Americans file for unemployment benefits each week due to the COVID-19 pandemic. Although the unemployment rate has fallen a bit to 13.3% for May, the rates are still at its highest since the Great Depression. With a resurgence of COVID-19 in recent weeks, many Americans will continue to struggle to make ends meet. Joining a credit union, paying bills with credit cards, and tracking expenses to cut back, are just a few options available to help.