Coronavirus: Lenders Help Consumers Who May Miss Payments
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What is the main topic discussed in this episode?
Here's your money briefing. I'm J.R. Whalen for The Wall Street Journal.
How are lenders responding to consumers at risk of missing payments due to the coronavirus?
Americans who are laid off from their jobs or whose work hours have been cut as a result of the coronavirus pandemic run the risk of missing credit card and mortgage payments. Lenders realize that isn't the fault of the consumer, and they're coming up with ways for consumers to avoid doing damage to their credit.
If all of a sudden people who've had good credit, who've been paying their bills, you know, they're out of a job, they're out of income, and they fall behind on payments, this is something that could follow them for a while and hinder their ability to get financing in the future once their income returns or if they find another job.
That's Wall Street Journal reporter Anna Maria Andriotis. Coming up, she'll explain how credit card and mortgage lenders plan to help consumers with both short-term and long-term solutions.
Americans are holding record levels of debt and financial hardship brought on by the coronavirus could cause consumers to default on payments and do significant damage to their credit scores. Wall Street Journal reporter Anna Maria Andriotis joins us to explain how lenders are trying to help their customers avoid that scenario. So, Anna Maria, how bad do credit card lenders think things could get?
What short-term credit card relief options are issuers offering right now?
The credit card lenders are concerned that now that thousands of people are out of work, given what's going on with the pandemic, that what could soon play out is an increase in missed payments. And so they are offering at this point a variety of assistance options for people who are suddenly out of income. Now, it's important to point out that these options vary by lender, and it's a situation in which people are going to have to speak directly with their credit card lenders, with their banks, to find out what is available for them. But the types of assistance programs that are available right now is a number of lenders are waiving late fees for people who missed their payments. Citi is an example of a lender that is actually increasing assistance
spending limits on credit cards for some cardholders. The bank is saying it's on a case-by-case basis. And so it's basically doing this, for example, for people who are dealing with rising out-of-pocket medical expenses right now.
Which lenders are delaying payments or waiving fees and how do those programs vary?
Those are examples of credit card holders who could see some assistance. JP Morgan is delaying due dates for borrowers on credit cards and on other loans. Goldman Sachs on its personal loans is also allowing people to delay payments in that case for a month.
Have you heard from lenders that this set of relief tools could expand if the pandemic continues for an extended period of time?
The most significant difference in the relief that's being offered right now between lenders is that some of these assistance efforts are sort of short-term relief options. And then there's some lenders are assisting people more for the longer term. It's important to point out that the assistance options that are available are not set in stone. And it is my understanding from my conversations with the credit card issuers and other lenders that the assistance options will continue to evolve over As things play out, and certainly if this unemployment issue goes on for a longer time, and they do vary by lender and by person. So if you know somebody who got some type of relief from the same credit card lender that you have, don't automatically assume that that will be available to you.
That is something that each individual will have to speak with their lender to figure out. Now, while waiving late fees and allowing people to miss payments for one month are certainly very helpful for people facing a cash crunch.
I would imagine people are also very concerned about how this would affect their credit scores as well.
That's right, a missed payment right now, if it's reported by the lender to the credit reporting firms, Experian, Equifax, TransUnion, will end up on people's credit reports and will follow them for seven years.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How are lenders responding to consumers at risk of missing payments due to the coronavirus?
0:09–1:26
3
What short-term credit card relief options are issuers offering right now?
1:26–2:31
4
Which lenders are delaying payments or waiving fees and how do those programs vary?
2:31–4:56
5
Could relief programs expand if the pandemic and unemployment persist?
4:56–6:27
6
How will missed payments affect consumers' credit scores and reports?
6:27–7:34
7
What mortgage forbearance and foreclosure-suspension measures are Fannie Mae, Freddie Mac and the FHA offering?
7:34–9:46
8
Why is uncertainty over credit-reporting codes important for long-term consumer relief?
9:46–9:55
Speakers
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