The coronavirus outbreak has been an incredibly stressful period, because although this is a health-based emergency, it’s also a financial-based emergency too.
Things you can do right now
The furlough and self-employment income support schemes ended on 30 September 2021. But there is help available if you’re on a low income or have lost your job.
If it’s possible, you need to put aside some money for if you can’t work to top up any drop in income. You’ll also need to look at what outgoings you have and work out the best ways to fund them in the short term. Follow these steps first.
Step 1. Do a budget
If you’re worried about cashflow have a look at what you’re spending and what income you have coming in. Is there anything you can cut back on to help you out until you get back on your feet.
You can also use this time to think about longer-term savings using our Budget Planner or look at ways to cut the cost of your household bills such as making sure you’re on the best deal with your current energy supplier or mobile phone contracts.
Read our guide How to save money on household bills
Step 2. Check your insurance policies
Check whether you have insurance policies that would cover your mortgage payments or replace some of your income. For example:
- Income protection insurance
- Mortgage payment protection insurance
- Accident, sickness and unemployment insurance.
These types of insurance are often offered with life insurance policies or mortgages and it’s easy to forget you have cover.
There is usually a minimum time period, which could be several months, before these policies pay out, so you should talk to your insurer to find out more, particularly if you are worried about redundancy.Back to top
Step 3. Talk to your creditors if you think you’re going to miss payments
Once you’ve done your budget if you think you’re going to struggle to pay essential bills make sure you talk to the people you owe money to before it becomes a problem.
Step 4. Use your savings
Do you have some savings you can rely on? Don’t assume you can’t get your money if it’s in a fixed term or notice savings account. Some banks and building societies are now saying you’ll be able to access them with no penalties. Check with your bank or building society if they’re able to help.
Coronavirus and your mental wellbeing
Coronavirus will have a big impact on a lot of our finances, which might negatively affect our mental wellbeing. Poor mental wellbeing might mean that you struggle to make the best money-based decisions for you, as well as act upon them. If you are feeling stressed, check out our Money problems and poor mental wellbeing guide for practical tips on how to cope financially through the pandemic, as well as where you can get free specialist help.
Remember, if you are struggling, it is always worth getting in contact with your bank, building society, lender or whoever you owe money to, to discuss your options. Many companies are aware that their customers are struggling with money at the moment and have put processes in to help. However, you can’t benefit from that help if you don’t let them know your situation.
Help with loans, credit cards and finance agreements
You had until 31 March 2021 to apply for a payment holiday, also known as a payment freeze, on a number of borrowing options and finance agreements.
If you’ve already taken your full payment holiday, it’s important you understand what happens when it comes to an end and what extra support might be available if you’re still strugging.
Personal loans – What to do when your coronavirus loan payment holiday has ended
Rent to Own (RTO) –What to do when your coronavirus rent to own (RTO) payment holiday has ended.
Buy Now Pay Later (BNPL) –What to do when your coronavirus Buy Now Pay Later (BNPL) payment holiday has ended
Pawnbroking agreements –What to do when your coronavirus pawnbroker payment holiday has ended
Individual credit files should not be affected but if you are worried you should speak with your lender. You should also remember there are other ways lenders can tell whether you have taken a payment holiday which could impact future lending decisions.
Your lender or provider might take into account other information when making lending decisions, including information provided by you or bank account information.
Problems paying your mobile phone and broadband bill
There is no specific support if you’re struggling to pay your mobile phone or broadband bill.
However, if you need help you should check your provider’s website and contact them straight away to explain the situation. Many providers do have support in place to help you if your finances have been affected because of coronavirus.
This might include:
- changing your bill date
- setting up an affordable repayment plan
- moving to a different tariff
- lowering your spending cap
- only using your phone when you need to.
If you’re on a mobile phone contract, you might be able to move to a pay as you go tariff, but this might involve paying a fee to end your contract early.
If you are worried about debt
Facing a sudden drop in income if you’re already juggling other debts can have a severe impact on your finances and is probably the last thing you need right now. You may have been managing to make repayments on money you owe but this crisis is going to push you into problem debt.
Although there may be a lot going on in your life that makes it easy to ignore debt, the sooner you get help the sooner you can get back on track.
There is lots of free, confidential debt advice out there to support you and you don’t have to face the problem alone. Talking to someone can mean one less problem off your mind.
If you think you might have to borrow money
If you don’t have any savings and are facing an emergency cash shortfall, borrowing may feel like your only option.
Try and use borrowing as a last resort and if you need to borrow, make sure you choose the right type of credit or loan for your situation. Otherwise, you could find yourself paying more than you need to.
Shop around and compare deals, looking at:
- the interest rate and the Annual Percentage Rate (APR)
- how much you will repay in total and whether you can afford the repayments
- any penalties for missed or late payments
- the cost per week or month and whether this might vary.
Borrowing from family and friends
If you’re able to borrow some money from family or friends who can lend you the extra cash, this could be a cheap way of getting extra money without resorting to Payday lenders or other types of high cost credit. They are also likely be more flexible about how you pay the money back.
Hopefully this will be a quick and easy short-term arrangement but you might want to read our guide Borrowing money from family and friends to make sure there are no arguments further down the line, especially if they get sick and need the money back in a hurry.
Personal loans and credit cards
If you’re thinking about getting a new loan or credit card, it’s particularly important now to think about if you can afford the repayments as your circumstances could change quickly because of the coronavirus outbreak.
Your credit rating affects the cost of your borrowing and it’s important to shop around and do some research on comparison sites.
Find out more in our guide How your credit rating affects the cost of borrowing
If you’re only going to have to cope with a drop in income for a couple of weeks a payday loan could seem like a really quick fix to help you until you’re back at work again.
However, there are a number of traps you could fall into with payday loans if you don’t know what you’re letting yourself in for.
Before you sign up for any payday loan, we strongly recommend you read our guide Payday loans – what you need to know
Other types of borrowing
Loans from credit unions are much cheaper than from other lenders and you can pay the money back at a rate you can afford.
Find out more in our guide Borrowing from a credit union
If you’ve been turned down for credit by high street lenders, then you can look at fair finance providers. Their interest rates are lower than high-cost credit providers but higher than a credit union. Repayments are based on an affordability assessment which ensures the borrower can keep up with the repayments.
Pawnbrokers are another option where you leave something valuable, such as jewellery, as security for a loan. The rate of interest you will be charged is normally lower than a high street bank and it’s unlikely you will get the full value of the item, but you will get a quick decision.
See our guide on Pawnbrokers – how they work
High cost credit – things to think about
If your credit rating isn’t so great, cheaper borrowing may not be an option for you and you may be tempted by other forms of high cost credit, such as logbook loans or doorstep loans to see you through the crisis.
These forms of credit can work out to be very expensive and you need to think very carefully before you decide to borrow in this way. Before you make a decision read our guides.
Before you make a decision read our guides:
Avoid loan sharks
Loan sharks are illegal lenders who often target people who are desperate and who can’t get mainstream credit. They might seem friendly at first but borrowing from them is never a good idea – even if you feel you have no other options.
Read our guide on Loan sharks
This article is provided by the Money Advice Service.