We recently held our first live Q&A on Twitter to answer your questions about navigating finances during this challenging time. We received a lot of great questions about everything from the stimulus checks to refinancing mortgages, so we wanted to share a summary here for those that have similar inquiries.
We are planning to host these live Q&As every Thursday in April at 3:00 pm ET/12:00 pm PT, so please join us using the hashtag #SesameChat! We are available to answer your questions and provide you with the right resources. In the meantime, Credit Sesame can be a free valuable resource to help you monitor your finances during these uncertain times.
Questions About Stimulus Payments
Who will receive the stimulus checks?
All legal US residents who filed tax returns for either 2019 or 2018 are eligible. The amount you receive will depend on your total income from prior tax filings. Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. To see if you are eligible and calculate how much you could receive, visit our stimulus calculator.
Will we be taxed on the payments?
You will not need to pay taxes on your stimulus payment.
What is taken into consideration with the amount you will receive with the stimulus checks?
It depends on your gross income from your 2019 tax filing. If you haven’t filed for 2019 taxes yet, the IRS will refer to your 2018 filing. The amount you can receive also depends on the number of qualified dependents under the age of 17.
Is the stimulus bill a one time thing?
Will these stimulus checks be deposited into my bank account if I have already filed taxes?
The IRS will deposit the stimulus payment into the same banking account on your tax return. If you’d like to change the form of payment distribution, an IRS web portal will soon be available for you to do so.
If you’ve filed your 2019 taxes, the IRS will use that to determine your stimulus payment. If not, they’ll use 2018’s, so waiting to file should not impact when you receive your payment.
For more information, visit the IRS website.
Questions About Prioritizing and Paying Bills
Should I contact my lenders individually if I have issues repaying loans?
Yes, you should reach out to them individually to put an agreement in place so that your credit score is not negatively impacted. You can learn more about banks offering relief options and check out their contact information here.
Several banks and lenders are offering temporary relief, but it is important to contact them first to put an agreement in place. Don’t just skip a payment. We have put together a list of banks with their contact info here.
If you’ve gotten to the point where you need to prioritize bills, which bill should you prioritize first?
You should reach out to your lenders or providers to see who has forbearance programs and who does not. If you can defer some payments, that can help you decide which to pay now. Here is a list of utilities and cable companies providing relief.
If student loans are deferred, should you still pay if you can or will you get penalized for deferment?
For federal loans, you shouldn’t be penalized but it’s important to reach out to your lender to put an agreement in place to protect your credit score. If you can afford to pay at this time, you should continue to make payments as usual.
Is there going to be leniency for medical bills?
We would recommend reaching out to the medical billing department of your provider to discuss your options. Many are willing to work with you and set up a payment plan.
Questions About Loans and Interest Rates
Rates are historically low right now with some lenders—in the low-3% range. Because of this, lenders are receiving an overwhelming number of applications. Some lenders have artificially high rates, so it is best to check with multiple lenders to ensure you’re getting the best rate.
Our general take is that it is not a great time right now, except for those with fairly good credit. Many personal loan lenders are pulling back and have tightened their underwriting requirements. However, if you need an extra buffer to pay bills or buy essentials, you may want to look into an emergency credit card with a low interest rate.
It depends on the loan. Mortgage rates, for instance, are lower now, but personal loans are becoming more difficult to get. We’ve outlined recommendations for different kinds of loans here.
Questions About Protecting Your Credit Score
You should check with your lender first and put an agreement in place. Many government-backed mortgage loans will have a forbearance program, so you should contact your lender to better understand your options. With proper arrangements, your score should not generally be impacted.
Will it affect my credit if I pay bills late due to COVID? I know a lot of companies are offering no late fees and no cut-offs, but what about my credit?
Although many companies are offering relief, it is important to contact them to put an agreement in place. Just skipping your payments may impact your credit score, but you should be protected if you make the proper arrangements.
If my credit history is only two years old, how does it affect my approval chances?
In addition to your credit score, lenders take many factors into consideration, such as length of employment and income, when determining loan approval and interest rates. A young credit history shouldn’t be an issue if you have a strong payment history and high grades in other factors. You can learn more about your credit score and the different components by logging into your free Credit Sesame account. If you don’t have a Credit Sesame account yet, consider signing up to stay on top of your credit.
Questions About Savings and Retirement
How much emergency funds do you really need?
It depends on your situation, expenses, and dependents. Experts have recommended saving at least three months of expenses. If you have money left over after your necessary expenses, setting it aside for emergencies could be a great option.
Should you move money in your 401(k) or leave it alone and keep adding to it?
In general, you should avoid withdrawing money from your 401(k) unless you need to as a last resort or you are of retirement age. If your employment is stable, you can also check with your employer to see if a 401(k) loan is an option.
If you withdraw money from investments or 401(k) will you be penalized?
If you’ve been impacted financially by COVID-19, the CARES Act waives the 10% early withdrawal penalty. So you can withdraw up to $100,000 and not be penalized if this is needed to pay your expenses.
We look forward to answering more of your questions during our live Twitter Q&As in April!