• Peregrin

What the Next Stimulus Package Might Look Like – and How That Affects Your Cardmembers

Updated: Sep 21, 2020

We’ve been talking pretty regularly about the potential wave of defaults coming up in October. You can check out our first post about it here and our timeline for how we believe those defaults will shake out right here. In the meantime, Congress is working on putting together another stimulus package for the American people. This package is sure to look a little different than the last one due to conflicts between the political parties in Congress.

What You Can Expect to See in This Stimulus Package for Individuals

One thing that many Americans can count on is another stimulus check. Currently, the plan is to set the threshold at $1,200 again – however Republican lawmakers would prefer that only individuals who make less than $40,000 per year receive them this time around. Democrats are uncomfortable with this provision so it may still change.

The unemployment benefit of an extra $600 per month ends at the end of July but both parties would still like to see some type of extra benefit for people on unemployment. Republicans are proposing 70% of lost wages to be made up through these bonuses. Democrats would prefer the $600 to go through the end of the year.

Regardless of which they go with, it is likely that extra unemployment benefits will continue. This is going to be crucial since large corporations will be able to begin notifying employees of large layoffs starting August 1, effective in early October.

The eviction moratorium for renters may also be extended. This moratorium recently lapsed, leaving 12 million renters at risk of eviction so Congress is attempting to move quickly on this one as the pandemic continues to sweep across the nation.

What May Look Different in This Second Stimulus Package

For the first CARES package, Congress decided to put federal student loan payments on hold and prevent credit scores from dropping as a result. Currently, Republicans do not have a plan for student loan forgiveness or further forbearance.

Democrats would like to reduce student loan debt, set the interest rate at 0%, and halt collection of federal student loan debt through the end of September 2021.

There are still questions about extending mortgage and credit card payment deferrals. These may come as standalone legislation later on, in a revised CARES package, or not at all, depending on what Congress chooses to do.

How This Package May Affect Cardmembers and the Default Timeline

Congress should be voting within the next week or two on CARES 2. There are a few important takeaways from this new package:

  • Potentially, not as many Americans will receive full stimulus checks, even if they need them

  • Unemployment buffers may be significantly reduced

  • Consumers are going to have to decide where the most important places are to put their money

  • Defaults may slow down, but there is a strong chance they will still begin in October, especially with large corporations beginning to announce layoffs

If your institution hasn’t started preparing for the upcoming wave of defaults, now is the time to get started. Placing a focus on providing budgeting and counseling resources to your cardmembers, and digitizing and streamlining processes to support cardmembers seeking to pay down debt on workout plans empowers you to take an offensive position of control rather than a reactive, defensive position once defaults start rolling in.

Questions? Peregrin can help. Give us a call today at 1-800-231-2493 or contact us online for more information.

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