Wilbur Ross says government employees should just get loans, but it’s not that easy
Commerce Secretary Wilbur Ross says he is perplexed about why hundreds of thousands of furloughed government employees that aren’t receiving paychecks aren’t going to their bank and taking out a personal loan.
It turns out it’s not that easy.
The prolonged shutdown is about to deal another financial blow to government employees who are set to miss their second paycheck on Friday, and although many of the nation’s top banks do have relief measures in place, not many offer personal loans with special conditions for furloughed workers. Many don’t offer small person loans as a product at all.
“The thirty days of pay that people will be out – there’s no real reason why they shouldn’t be able to get a loan against it and we’ve seen a number of ads from the financial institutions doing that,” Sec. Ross said on CNBC Thursday morning.
Wells Fargo, J.P. Morgan Chase, Bank of America and Citigroup have tried to get ahead of the issue and contact clients they identified as federal employees via mail, email and social media to tell them of their relief options. However, most of these assistance programs are on a case by case basis that requires the client to initiate the conversation via a phone call to a dedicated number.
Here are what the big four U.S. banks are offering to furloughed employees:
Bank of America doesn’t offer personal loans as a product, so that isn’t an option for furloughed workers. However, the bank has a dedicated client assistance hotline for government employees to call and receive various relief options the bank is offering. (Hotline: 844-219-0690)
For example, if you are a credit card holder experiencing cash flow issues, one option could be to have the available credit amount deposited as cash into your checking account at a zero percent interest rate for up to six months. Another option the bank is offering is a zero percent interest rate on retail purchases made on your credit card for necessities like groceries, gas or school supplies.
In addition, the nation’s second largest bank by assets, can defer payments on auto loans for up to two months and defer payments on mortgages and home equity loans for up to three months.
Importantly, if a customer takes advantage of any of these options the bank is not reporting it to the credit bureaus. Something that Bank of America’s peers, J.P. Morgan and Wells Fargo are also offering to clients impacted by the shutdown.
Nearly two weeks ago, Bank of America sent emails to 260,000 clients they identified as being a federal employee to urge them to call the dedicated assistance hotline. To date, more than 16,000 clients have called to seek temporary relief options.
In recent days, the bank has seen a notable uptick in the volume of calls from furloughed workers, according to a Bank of America spokesman.
Wells Fargo is one of the banks that does offer a personal loan as a product. However, as of right now, a zero-interest or low-interest personal loan is not one of the relief measures available to furloughed workers. In order to obtain a loan, they’ll have to qualify like any normal applicant.
Though, the bank is working with impacted customers in others ways.
Currently, if a customer who had a payroll check direct deposited into a Wells Fargo account as of Nov. 2018, the bank will automatically reverse the monthly service fee and any overdraft/non-sufficient fund fees on that account. Wells Fargo will also automatically reverse and waive late fees on credit accounts, including consumer and small business credit cards, auto loans, personal lines and loans, student loans, small business loans, home equity loans, and home mortgages.
For government workers having issues paying loans on their mortgage, home equity or non-mortgage products, options include a 90-day short-term forbearance plan or a 30-day extension on the payment due date depending on the product. Although these options are not provided automatically and are dealt with on a case by case basis after the customer calls Wells Fargo.
According to a spokeswoman, about two weeks ago the bank sent out around 700,000 emails to clients they identified as being a Federal Government employee. As of Jan. 22, Wells Fargo has provided payment assistance to over 14,000 customers who called to request relief, according to the spokesperson. In addition, the bank has also provided over $2.6 million in fee waivers.
(Hotline: 800-219-9739 )
J.P. Morgan Chase, doesn’t offer personal loans as a product, so that is not an option for furloughed government employees. However, any Chase customer impacted by the shutdown — including government contractors and affected small business owners – could be eligible for some form of relief.
Since December 24, the nation’s largest bank by assets, has been automatically refunding overdraft and monthly service fees for any Chase checking and savings customer that the bank has identified as working for an affected federal agency.
In addition, accounts mortgage business is providing relief from late fees and working individually with customers who contact call their Chase Special Care Line to speak with a specialist.
J.P. Morgan has provided relief in some form to nearly 30,000 customers, which is a combination of customers who called to request assistance and those identified by the bank as being a Federal employee and automatically received relief.
In the event of a prolonged shutdown, J.P. Morgan may make additional options available for eligible customers, according to a spokeswoman for the bank.
(Hotline: 1-888-356-0023 )
Citigroup, which provides travel cards for federal agencies, has also deployed a special Government Shutdown Assistance program for federal employees. This program offers assistance that includes waiving late fees for up to ten days after the shutdown ends and preventing the suspension or cancellation of accounts.
Citi cardholders that are in good standing may also qualify for refunds or waivers of late fees, interest charge waivers, credit line increases, as well as collection forbearance and settlement programs. The bank is also automatically refunding any monthly service or overdraft fees for clients who are federal employees with direct deposit accounts with the bank.
(Hotlines: Citi Cards: 1-800-950-5114 – Citibank: 1-888-248-4226 – CitiMortgage: 1-877-211-3758)
USAA is offering a low-interest loan that current members can pay back over the next 12 months at a 0.01 APR, according to the spokesperson. But the loan is subject to credit approval.
Navy Federal Credit Union, the world’s largest credit union whose members include workers in the Coast Guard and other armed services and several government agencies, has a no-interest loan program that will cover half to all of a missing paycheck up to $6,000 per pay period with no credit check required. The catch is workers can’t get access to the loan program if they don’t have a direct deposit account there already.
Some 19,000 of the 100,000 or so Navy Federal members eligible for the program signed up to have their first paycheck covered earlier this month and more are expected to sign up for it to cover this week’s check, a spokesman said. He wouldn’t disclose how much money had been disbursed already.
Pentagon Federal Credit Union, with 1.7 million members, has two offerings. For affected workers that have an account with direct deposit already, it is offering a no-interest advance on an overdraft line of credit in the amount of the most recent paycheck up to $6,000. This is available to those who have been PenFed members for 12 months and a direct deposit coming from a furloughed agency.
PenFed also has an unsecured, fixed-rate loan for any affected federal worker. But this is subject to income verification and credit guidelines.
SunTrust, a regional bank in the Southeast, has a 90-day no interest, no-payment loan for affected workers who are the bank’s customers as of the end of December. The loans are for $3,000 to $10,000, subject to some credit conditions.
— With reporting by Liz Moyer