Furloughed by the shutdown? Banks are here to help
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As the shutdown drags on, a number of banks are offering assistance to customers in the form of loan relief and refunds for missed payments.
Why it matters: Federal workers are about to miss their first paychecks and they're going to need money. These offers from banks could help keep them afloat.
Where it stands: Chase, Citi, Citizens and TD are among the banks that confirmed their assistance offers for federal workers to Axios.
- The experience of the pandemic, when banks doled out federal funds and made loans, prepared them to make a quick response.
- The pandemic "built a lot of muscle" for the industry, Mark Valentino, the president of business banking at Citizens, tells Axios.
- "You're probably seeing more of this advertised in the industry than you saw five or 10 years ago," he says of the bank offers.
The big picture: The assistance offers vary, with some banks capping loan amounts and others offering interest-free loans. But these aren't 0% loans forever. There are also credit score requirements.
- TD is offering loan assistance for those who are struggling to make auto or mortgage payments and for small-business and commercial clients.
- Chase is offering fee waivers and repayment plans for home lending and credit cards, proactively refunding monthly service and overdraft fees to customers with direct deposits tied to federal government accounts.
Zoom in: At least six regional banks are offering zero-rate loans, according to the American Bankers Association, which compiled a partial list of the steps that banks are taking for customers affected by the shutdown.
- The big banks are less likely to offer specific targeted loans and are more likely telling customers they will work with them, says Stephen Kates, a financial analyst at Bankrate.
Between the lines: Banks are offering these programs in part out of self-interest, since it generates good will and new customers, Kates notes.
Reality check: If the shutdown lasts more than one or two pay periods, these programs may not be enough to help federal workers. The longer it drags, the more likely it is to become "more of a systemic issue," Valentino says.
What to watch: Kates says he hasn't seen any products with a "gotcha."
- "The hammer would come down on any legitimate institution that tried to pull that on the federal workforce," according to Kates.
- That said, any kind of situations where there is vulnerability — like hurricanes or a shutdown — brings out scammers, he says.
- "Federal workers should absolutely be on the lookout."
