How Banks Are Helping Those Impacted by COVID-19

The COVID-19 pandemic has affected millions of Americans financially. In a survey by the National Endowment for Financial Education, three in 10 Americans said paying off debt is their top financial stressor, while 55% were worried about having enough cash tucked away in savings. Though the federal government has introduced numerous measures to provide coronavirus relief, banks are also stepping up to help customers in a variety of ways.

COVID-19 Relief and Bank Accounts

Two of the biggest issues that banks are addressing with COVID-19 relief are access to funds and the impact of fees. Social distancing requirements have changed the way many brick-and-mortar banks operate.

As a result, they now encourage customers to use online and mobile banking tools as well as automated teller machines (ATMs) as much as possible. While branches are open, they may have limited hours or limited capacity and require appointments beforehand.

Banks are also taking a closer look at the impact of fees on customers' financial health during this time. To ease some of the financial strain, banks may be offering COVID-19 waivers that cover a range of fees, including:

• Overdraft and non-sufficient funds (NSF) fees
• ATM fees, including foreign ATM fees
• Early withdrawal penalties for CDs
• Excess withdrawal penalties for savings accounts

In April 2020, the Federal Reserve introduced an interim rule to eliminate the six-per-month limit on so-called convenient transfers from savings accounts provided for under Regulation D. But that change didn't require banks to stop charging excess withdrawal fees to customers who went over the six-transaction limit. Some banks have, however, chosen to do so. Ally Bank, for example, will refund any excess transaction fees to customers who go over the limit.

Banks are also helping customers who receive a stimulus check hold on to more of their money. A number of the biggest banks, including Wells Fargo and Citi, said they would not apply stimulus funds toward any negative balances in customer accounts. So customers who received stimulus payments via direct deposit while their accounts were overdrawn were not penalized.

COVID-19 Relief and Bank Loans

If you have a mortgage through your bank, you may already be covered by federal coronavirus relief. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act made it possible for homeowners with eligible home loans to apply for temporary mortgage forbearance. The new law also introduced a temporary moratorium on foreclosures for Fannie Mae, Freddie Mac, VA, FHA, and USDA loans.

Banks also offer programs to help make mortgages, as well as other types of loans, more manageable during the pandemic. At many financial institutions, this relief takes the form of payment deferrals and fee waivers. Depending on the bank, the types of loans that may be covered include:

• Mortgage loans
• Refinance loans
• Home equity loans
• Auto loans
• Personal loans
• Lines of credit
• Business loans

Approval for loan payment deferral isn't automatic and banks may have eligibility requirements that borrowers need to meet. The length of time for which payments can be deferred may also vary from bank to bank. Note that your payments may be restructured to account for the ones you missed during a deferral or forbearance period. You may also be responsible for making a balloon payment at the end of the loan term, so it's important to find out before applying.

COVID-19 Relief for Private Student Loans

The federal government extended coronavirus student loan relief through 2023 for eligible borrowers, after a federal court order blocked the administration's student loan forgiveness plan. The White House announced that student loan payments are paused until whichever of the following two dates happens first: 60 days after the department is allowed to implement the student loan forgiveness plan or the litigation is resolved; or 60 days past June 30, 2023.

In August 2022, the White House announced plans to provide targeted student debt relief to borrowers with loans held by the Department of Education. But federal courts blocked the plan, and as of Nov. 11, 2022, the Biden administration is no longer accepting applications for the program. In the wake of the federal court order block, the White House extended the coronavirus student loan relief program.

The student loan relief program, which allows borrowers to defer payments and drops interest rates to 0%, applies to most federal student loans. Private student loans are not covered by these measures.

Although banks that offer private student loans aren't required to follow the federal program, some have introduced similar initiatives to help borrowers. Discover Bank, for example, has a number of programs, including forbearance and hardship payment reductions, for borrowers who are having financial difficulties.

COVID-19 Credit Card Relief

Credit card users who took a financial hit during the pandemic may get some relief from their banks. Depending on your bank or card issuer, you could be eligible for any of the following:

• Minimum payment waivers or reductions
• Late fee waivers or refunds
• Interest rate reductions
• Hardship payment plans

Any of these options could make managing your credit card debt during the pandemic easier. Of course, even during this difficult period, it's important to keep up with loan and credit card payments to minimize potentially negative impacts on your credit score. A single late payment could cost you significant points, making it more difficult to borrow money down the line, especially at favorable interest rates.

How to Get COVID-19 Relief From Your Bank

The simplest way to get help from your bank if you're struggling because of the coronavirus pandemic is to ask. Many banks have set up pages on their websites that list their COVID-19 relief programs, who's eligible, and how to apply. Some encourage you to apply for aid online, because telephone customer service wait times may be unusually high.

If you've reached out to your bank and it isn't offering much help, consider switching to a different bank. In that case, shop around for the best interest rates, most reasonable fees, and (for now) COVID-19 relief programs. Investopedia publishes regularly updated lists of the best bank accounts for people with different needs, such as the best checking accounts with no ATM fees and the best high-yield savings accounts.