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Millions of Americans are struggling financially during the COVID-19 crisis, whether due to complete income loss or a reduction in earnings. If you’re having a hard time paying your bills, the good news is that some relief may be available — especially if you’re a Citi cardholder.
Use reward points to your advantage
Citi cardholders get the option to rack up reward points, known as ThankYou points, which can typically be redeemed for travel, gift cards, or statement credits. But now, you get the option to apply your points to your minimum monthly credit card payment. That’s a good way to avoid falling behind and harming your credit score in the process.
What will your ThankYou points be worth?
The value of your ThankYou points will hinge on how you choose to redeem them. If you apply your ThankYou points to your minimum monthly payment, Bankrate’s analyst Ted Rossman says they’ll be worth $0.008 per point. In comparison, when you redeem those points for a statement credit, their value shrinks to $0.005 per point, but when you redeem them for gift cards, they’re worth $0.01 per point.
And if you redeem your points for travel, they’ll be worth between $0.01 and $0.03 through transfers to travel partners. (Though if you’re having trouble making your minimum balance, spending money on travel is not really a great idea unless it’s essential.)
Should you use your reward points to pay your minimum balance?
If you don’t have the money to make your minimum monthly payment, then redeeming your Citi reward points for that purpose makes sense. If you fail to make your minimum payment, you’ll be reported as delinquent to the major credit bureaus that calculate your credit score. And once your score drops, it will be more difficult to borrow money affordably when you need to.
On the other hand, if you can swing your minimum payments, you’ll get more value from your points by redeeming them for a gift card. And it makes even more sense if there are gift cards available for stores that sell essentials, like food and clothing. You can also hang onto those points and reserve them for travel for when you’re in a better financial position, or for when the COVID-19 pandemic is over.
Aim to pay off more than just your minimum
As the name implies, your minimum balance is the amount you must pay to keep your credit card account in good standing. But that doesn’t mean you shouldn’t aim to knock out a larger chunk of your balance, or even your entire balance, if possible. The longer you carry that balance, the more interest charges you’ll accrue, which will cost you money over time.
Of course, money is tight for a lot of people right now, so if that’s the case, you may have no choice but to stick to your minimum monthly payments until things improve. But if you have extra wiggle room in your budget — say, because your paycheck has held steady but you’re no longer paying to commute to work — then you stand to benefit if you use those savings to chip away at the balance you owe.
What if you don’t have reward points to redeem?
You may be in a situation where you don’t have a stash of reward points to tap, and you owe money on your Citi card, or any other credit card, for that matter. If that’s the case, reach out to your card issuer and talk through your relief options.
A lot of credit card companies are offering additional assistance during the COVID-19 crisis, so it pays to see what’s available to you. Citi, for example, is waiving late fees and letting customers defer two months’ worth of minimum payments, but you need to call and request those allowances; they don’t come automatically.
But perhaps the worst thing you can do is blow off your minimum payment and watch your credit score tank. Doing so could put you in a dire position if an emergency strikes and you need to borrow money but can’t due to your poor credit.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.