The Covid crash has threatened the prosperity of millions across the country. While government support measures have gone some way to mitigate its effects, there has been an unseen level of redundancies and a recession of historical proportions.
However, some of the financial consequences will be slightly more insidious as the impacts slowly ripple outwards across the economy. Here are a few secondary impacts of the coronavirus pandemic that could harm your financial security:
Borrowing money is harder
When times are hard, lenders tighten their lending criteria in preparation for tumultuous economic times.
For many, it is now much harder to get a mortgage and credit card companies have dramatically reduced credit limits. For anyone who isn’t a perfect lending candidate, the chances of securing a loan have got far slimmer. This will disproportionately affect young adults who might not have as much financial security as older generations.
Financial services firm Hargreaves Lansdown report that lending has dried up even quicker than it did following the 2008 financial crash. What’s more, they also forecast that the situation for borrowers will get even tougher over the next three months.
You’re more likely to get scammed
Borrowing isn’t the only area where the waters might become a little more treacherous over the next few months. Fraudsters often use the latest news stories to coerce people into scams.
Difficult times bring the best out in some people – highlighted by the amazing community responses to the pandemic across the country. However, they bring out the worst in others…
Some scammers have actually gone so far as to impersonate the World Health Organisation.
Covid related scams take many forms; we’ve heard of scams about insurance policies, pension transfers and high return investment opportunities, including investments in coronavirus treatments.
Unfortunately, modern scammers are a sophisticated bunch and will try many tactics to persuade you to disclose personal or financial information – most victims report scammers to be impersonating a company they already deal with. Figures from Aviva indicate that 12 million people have already been targeted by coronavirus scammers in the UK.
You’re more likely to make weird spending decisions
The financial upheaval has placed most Britons into two groups. One group has saved a fortune during lockdown due to a reduction in their spending while the other has been catapulted into financial hardship.
Whichever group you fall into, it’s likely that your spending habits have changed. When we are going through tough times, we often unconsciously make spending decisions that we think will restore control.
Our inclination to have a steady supply of household items can be a way to regain a sense of control – look at how many stockpiled toilet roll in the early days of the pandemic.
When looking back on the last few months, many of us will find that our spending patterns have shifted considerably. It’s likely that the strong emotions and feelings that the pandemic provoked will have been at least partly responsible for this change.