Employees should avoid using high cost loans during coronavirus isolation periods

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Millions of employees around the UK will be feeling the squeeze over the next few weeks and months if they are unable to work due to the corona outbreak.

With the forced closure of many public places such as stadiums, concert halls, theatres, cinemas and more – many employees will rely on staff policies and statutory pay which could result in full, partial or zero payment.

However, for the staff members currently restricted at home, they will still need to pay rent, household bills and the extra costs associated with food and living supplies.

Millions of those unable to earn during the outbreak may run the risk of turning to high cost credit. This includes those short term loans where you can access money quickly, such as within 1 hour or 1 day, but these often run very high interest rates when compared to other alternatives.

Not only could Britons feel the need to overpay to borrow money, there is the risk that they could fall behind on payments and run up even greater debt. The high-cost short term loan industry is restricted to a daily price cap of 0.8% and £15 default fee, but these costs can add up, especially if a 30-day loan is prolonged for several months or the borrowers continues to top up.

Whilst you can opt for lower cost loans from the likes of credit unions or alternative lenders such as Oakam or The One Stop Money Shop, those looking for extra funds can consider some of other viable options below.

 

Ask for payment holidays

Some companies (such as Carluccio’s) have asked their landlords for payment holidays until the coronavirus settles. This is a viable option for your credit cards, mortgage and your rent and there will be terms mentioned in your original agreements and this could be worth researching, even to delay payment for a month or two.

 

Look at what financial options you have

If you have pressing credit card bills, you will have the option to make a minimum payment each month e.g 3%.

This will not incur any extra interest, but it will delay the overall repayment and give you a little longer and breathing space. Always double check with your credit card provider since this could impact your credit score.

Other options include using a balance transfer card if you need to move debt from one credit card to another – and you can usually get this interest free for 12 to 24 months.

 

Find gig jobs

If your employer has shut down for a couple of weeks, there are plenty of other gig jobs available. Whether it is helping other companies with deliveries or completing surveys or jobs online – there are other ways to replace your existing income.

 

Limit your expenditure

Gauge what sort of supply is available for things like medicine, food and toiletries. You may not need to spend hundreds of pounds on food if your local supermarket is still supplying as normal.

Make a list of your priorities and how long you think it will last and try budget according to what you need and not what you don’t.

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