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Financial education becomes an essential tool to face the economic challenges created by the pandemic
Concern about personal finances is growing among consumers; the ability to negotiate and manage resources is becoming increasingly important
São Paulo, May 26, 2020The economic uncertainties arising from the pandemic, ranging from the impact of a long-term shutdown of activities to keeping a job, have amplified concerns about personal finances. According to data from the credit bureau sector, around 80% of the population have had to review their household budget. In addition, more than half of Brazilians believe they will have difficulty paying all their bills during the crisis.
The situation is the same all over the world. A survey by the National Endowment for Financial Education (NEFE) shows that 881,000,000 Americans say the pandemic is causing stress in their personal finances. More than half (54%) say they are worried about not having saved enough, while 48% are worried about their ability to pay bills. In view of this, financial education, the foundations of which are control of spending and conscious use of resources, becomes a fundamental tool for getting through the period.
In this context, credit regulators have been improving financial literacy and consumer programs by publishing recommended action plans, as well as providing additional useful resources to borrowers. Some of the proposed initiatives include advising those facing payment difficulties to negotiate deferments and restructuring agreements.
Disclosing how credit bureaus will report and process late payments, deferrals and restructuring agreements in order to minimize the impact on credit scores, as well as government intervention, including policies, are among the measures in the plans.
The regulators' guidelines also suggest reviewing credit reports more frequently, supporting the implementation of policy recommendations through technical assistance programs, building the capacity of credit report service providers, and convening a global and regional forum to address emerging challenges and influence the formulation and updating of related policies.
As for the borrower, among the main financial education measures that can help at this time is negotiation. Emergency plans set up by regulatory agencies and credit market bodies around the world recommend that borrowers with payment difficulties approach credit providers about the possibility of postponing payments and restructuring agreements.
The postponement of due dates for obligations and flexibility between creditors and debtors are also indicated. In the opinion of the credit authorities, by establishing new conditions for the payment of debts, default is avoided and the needs of both parties are met.
“Reviewing the budget, changing priorities and, above all, renegotiating debts and re-evaluating loans and financing is fundamental and can help to get through this phase more smoothly. It's also worth remembering that fewer defaults means more access to credit, a resource that will play a fundamental role in the recovery of the post-coronavirus economy,” says Elias Sfeir, president of the National Association of Credit Bureaus (ANBC).
ANBC Press Relations
Regina Pimenta: (11) 98136.6835 regina@pimenta.com
Ana Carolina Rodrigues: (11) 98674.0348 anacarolina@pimenta.com
