In uncertain financial times, kick these monthly bills to the curb now to free up money later.
5 Types of Debt to Pay Off During the Coronavirus Pandemic
With millions of people filing for unemployment benefits during the coronavirus crisis, businesses closing and your health at risk, now is a terrible time to carry debt.
For one thing, you could ruin your credit if you lose your job and can’t make monthly payments on time – or at all. You may also have to charge more on your credit cards as the economy gets worse, and a credit card balance can jump from $200 to $2,000 fast when using the card to pay bills and daily expenses.
But how do you decide which debts to carry and which ones to pay off now?
Click or swipe for 5 debts you don’t want in your life during a troubled economy.
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1. Smaller balances
If you owe $80 to your doctor, $50 to the lawn care guy or $60 on a credit card, now is the time to knock out smaller debts so you’ll have fewer monthly payments to worry about if you lose your job or get laid off. You don’t want to blow those small debts off to save money, either, for a couple of reasons.
For one thing, payment history comprises around 35% of your credit score, so late payments can lower the score and make it hard to get credit later. Also, when people provide a service, you need to pay them on time, especially now, when small businesses are getting the wind knocked out of them, many with little hope for recovery.
2. Credit card debt
A couple of months ago, maybe your job seemed secure and you were confident your $1,000 emergency savings could cover unexpected expenses. If not, you’d just pay with a credit card. Times have changed, however. People are losing jobs or getting laid off everywhere and you don’t know that you and/or your spouse or significant other won’t be next.
Try to pay off any credit card debt or reduce the amount as soon as you can. That will be one less debt and monthly payment to worry about in tough economic times. Besides, you may have no choice but to charge on that credit card later, so keep the balance low or eliminate it altogether by paying the full amount due on each monthly statement.
3. 0% APR card offers nearing the end of the intro period
Maybe you got a great deal on 0% APR financing for 18 months when you bought new blinds or flooring from a big box store 14 months ago. Now, however, you still owe hundreds of dollars because you made only minimum payments.
In these uncertain times, you may not have a job or enough money to pay the balance before the 0% APR offer ends. And with many retail card offers, if you still owe a balance when the intro period ends, you’ll pay retroactive high-interest rates on the full amount from the date of purchase.
How high? The average APR for store-only and co-branded retail cards together is 26.01%, according to a survey by credit and personal finance site Creditcards.com. 
4. Student loan debt
In March 2020, President Trump announced a temporary waive on federal student loan interest until further notice, so now is a good time to make major headway on your student loan debt, maybe even getting rid of it once and for all.
Federal student loan borrowers may also suspend payments for up to 60 days with no interest, which is good news for those struggling to make payments.  However, if you have the money, now is the time to hit student loan debt hard to rapidly reduce the balance or pay it off.
Choosing to suspend payments as a safeguard? You can still make payments during the suspended payment period if your finances allow.
5. Cosigned debt
If you cosigned on a car loan for one of your kids or a friend down on his luck, you took on a risky responsibility. That’s because if the borrower doesn’t pay on time or defaults on the loan, both your credit histories will be damaged.
“A collection account in your credit history, whether as a cosigner or primary account holder, is extremely negative and will have serious implications when you apply for new credit,” according to major credit bureau Experian. 
Consider whether paying off the debt now and working out a repayment plan personally with the borrower could be a better option than hoping that person is making payments on time during a troubled economy.
Published by Debt.com, LLC