On Sunday morning, Goldman Sachs, the financial partner on the new Apple credit card, said it would allow all cardholders who asked for help to skip their March credit card bill. The interest would disappear, never to be charged. And Goldman would foot the bill itself, as the financial backer of the partnership.
On Sunday afternoon, I went to the largest credit card issuers, auto lenders and mortgage servicers and essentially asked them to match it: Would they do the same, for everyone, and declare a one-month — or longer — pause on bills and interest?
Several replied right away and said they would allow people to skip payments, interest free. They include American Express (cards), Capital One (auto loans and cards) and JPMorgan Chase (cards, so far). I’m glad to hear it, given that federal regulators more or less demanded last week that banks show some leniency.
Here’s one surprising company that would not make an ironclad commitment: the auto lending giant Ally Bank, which was the beneficiary of a federal bailout during the last financial crisis. Ally did say it would work with customers to identify their specific challenges and tailor solutions for them, but would not pause bills unilaterally.
“As has been our practice during previous periods of hardship, we are not using a one-size-fits-all approach,” a company spokeswoman said in an emailed statement on Monday. But this isn’t shaping up to be like past hardships. Statements like this — from companies that would not exist but for their own recent rescues — are baffling. And case-by-case solutions may quickly become impractical: Call centers may have to shut down, and they are likely to soon be overwhelmed with people seeking relief.
Economic circumstances may quickly outrun any concerns about which lender is offering what incremental assistance this week, so the fact that large companies will not just hit a giant pause button for everyone is deeply disappointing.
Yes, Goldman has a small fraction of the number of nonbusiness customers that other large financial institutions do. And yes, this is a pretty easy good-will win for the company, whose reputation took it on the chin during the last meltdown.
But if Goldman can see the light, so can other financial giants. A few hours after my initial contact with Ally, a spokeswoman followed up and said that given the fluidity of the situation, it was looking at other options for helping.
I suspect that if you communicate with a company yourself about a payment and interest pause — even the ones that say they’ll help — it may not agree to do so right away. Word of the leniency may not have spread to front-line service representatives yet, who themselves are probably questioning whether they should even be at work. Hats off to them for showing up and trying to help.
If any of the above lenders turn you down, gently remind them that their corporate representatives have been out in public saying that one-month waivers are possible, and contact me if they refuse to help you.
Even if the waiver goes through smoothly, make sure your lender agrees that the skipped payment will not ruin your credit. Goldman Sachs — which extended its policy to the personal loans it issues through its Marcus online bank — has promised that the pause will not bring down your credit score.
A pause may be more complex when it comes to mortgage servicers, and possibly some auto loan servicers that have turned the loans they issued into bonds and then sold them to investors.
“The overwhelming majority of the loans we originate and service are purchased by Fannie Mae, Freddie Mac and Ginnie Mae, which require all servicers follow their process for mortgage forbearances,” said a spokesman for Quicken Loans, the nation’s largest home loan originator. “Policymakers at the federal, state and local levels need to act now to present options that allow mortgage servicers to help homeowners whose cash flow may be impaired.”
General Motors also received a bailout during the last big downturn. What is it doing for customers now?
General Motors Financial said that it was not “currently” matching Goldman’s offering to customers. Instead, it pointed me to a website saying that it would be hard to contact its representatives right now. For those who succeed, this is the policy: “Each customer’s situation is unique and we’re here to help.”
At Ford Credit, according to a spokesman, people can call and pause this month’s car payment, but interest will continue to accrue.
Barclays has the same policy for its U.S. cardholders (and will not charge late or nonpayment fees even as interest does pile up). Bank of America will also allow skipped payments while still keeping the interest clock running for auto loan, credit card and mortgage customers.
I’m still trying to find out more from other lenders.
PNC Bank did not reply at all to my inquiries about a one-month waive. I’m awaiting more detailed information from Citibank, Santander and Wells Fargo. Discover said that it would match the Goldman Apple move for most cardholders in terms of the ability to skip a payment, but customers who already have too many late payments may not be eligible. It would not commit to waiving the accrual of interest though.
The New York Times Company is handling hardship requests from subscribers in distress on a case-by-case basis, according to a spokeswoman. Much of the coronavirus coverage is not behind its subscription paywall.
A one-month pause — for bills of all kinds — might not be enough for people whose incomes fall to zero. The longer the virus shuts down large swaths of economic activity, the more the government will need to consider moonshot ideas.
What could those be?
The federal government could declare it will stop collecting money on any bills from consumers, and possibly some businesses, too. That could include student loan payments and Medicare premiums.
The Internal Revenue Services could allow people not to pay their taxes for now, including freelancers and any entity with quarterly payments due April 15. This might already be in the works. And there is the possibility the government will have to hand out stimulus checks — large ones — to individuals. On Monday, Senator Mitt Romney, Republican of Utah, suggested sending $1,000 to every American adult as soon as possible. But it would probably take many weeks for something like that to become a policy reality and to figure out a way to distribute money to so many people.
Until then, many vulnerable people are at the mercy of banks, some of whom were saved from oblivion just a dozen years ago. They need to do more and do better. Now.