MW Banks like Chase, Capital One are offering financial help to customers affected by the shutdown. Here are the potential downsides.
By Genna Contino
Consumers seeking relief should read the fine print and take steps to protect their credit, experts warn
"Take the assistance if you need it, but be aware of what the risks are before you do," one expert said.
Banks and credit unions are offering relief to the hundreds of thousands of unpaid federal employees struggling to cover monthly bills during the government shutdown - and many workers are taking them up on it.
USAA has delivered more than $384 million in relief to 127,000 military servicemembers and federal employees impacted by the shutdown, a spokesperson told MarketWatch, including through loans and payment extensions. Navy Federal Credit Union said it has seen substantially higher uptake in its Paycheck Assistance Program, which offers zero-interest loans for customers impacted by paycheck disruptions, than it did during the 2018-'19 government shutdown.
Beyond organizations for federal employees and military members, several large U.S. banks - including Chase $(JPM)$, Bank of America (BAC), Wells Fargo $(WFC)$ and Citibank (C) - are publicizing new offerings for federal employees or encouraging those impacted by the government shutdown to reach out and inquire about available financial assistance.
Several major banks said they have had a significant increase in customers reaching out to request relief. One bank told MarketWatch it has seen a 10% to 15% uptick in mortgage-forbearance requests this month, though it could not say how many were from federal workers.
Read more: The government shutdown is barreling toward a terrible record. These financial pain points could end it.
These offerings, such as interest-free loans, fee waivers and loan-payment accommodations, can be a lifeline for the 1.4 million federal employees who are furloughed or working without pay. But consumers seeking relief should ask up front about any strings attached and take steps to protect their credit, experts warn.
"Take the assistance if you need it, but be aware of what the risks are before you do," said Alys Cohen, director of federal housing advocacy at the National Consumer Law Center. "Keep really good records and try to get things in writing from the lender and put things in writing yourself, even to confirm a phone call."
Here are four tips to consider before accepting this kind of assistance from your bank or credit union:
Read the fine print
Dozens of banks and credit unions are offering assistance for people impacted by the federal shutdown - but the terms of these programs differ widely depending on the financial institution, said Adam Rust, the director of financial services at the Consumer Federation of America.
"They're providing relief in different types of scenarios, and it's important to understand exactly what you're signing up for when you take one of these arrangements," Rust said.
Read more: Why Nov. 1 is a make-or-break day for millions of Americans' finances
For example, it's crucial to understand the distinction between zero-interest and accrued-interest programs. A zero-interest program means no interest is charged at all during the relief period, while an accrued-interest program pauses payments but continues adding interest in the background, which you'll still owe later.
It's essential to get details about the hardship program in writing, as well as contact information for a person at the financial institution who can answer questions. A misunderstanding or violation of the terms can wind up harming a person's credit.
Avoid the danger of a balloon repayment at the end of a forbearance period
When money gets tight, many prioritize mortgage payments over credit cards, student loans or personal loans, said Bankrate financial analyst Stephen Kates.
"Homes right now are a big asset with a lot of home equity for a lot of people," said Kates, who is also a certified financial planner. "That is a huge asset for them to hold on to."
Read more: Inflation is quietly chipping away at most Americans' main source of wealth
Consumers generally can get a full or partial forbearance, a temporary arrangement with a lender that allows them to pause or reduce their mortgage payments due to a financial hardship.
For those making partial payments, the amount will not count as a full, on-time monthly payment until the total collected equals the full required amount. It can also fall on the consumer to figure out if late fees will be waived during this time.
A big danger that comes with mortgage forbearance is a potential balloon payment - when a lump sum of missed payments is owed at the end of a forbearance period.
"If you have to pay a balloon payment at the end of the forbearance and you can't afford that, that could put you in a much more difficult situation," Cohen said.
Luckily, the current standard for many government-backed loans is to extend the term of the mortgage for the number of months missed. For instance, if you missed seven payments during forbearance, the loan is extended by seven months.
Read more: A government shutdown would hurt home-buying deals just as buyers are coming off the sidelines
Keep in mind that interest payments are not paused during the forbearance period, "but if you're trying to keep your home and stay in your mortgage and you could afford to resume the payments, it's a modest price to pay for getting the forgiveness."
Homeowners also need to stay on top of the forbearance timeline.
"People should find out if they're going to be notified when the forbearance ends or when they have to call to extend it and whether that's on them," Cohen said. "They should have a whole calendar set up so they understand what the timeline is for their arrangement with their lender."
Prioritize the roof over your head - but keep in mind these credit risks
Lenders reporting payments to credit-reporting bureaus typically mark deferred payments for consumers enrolled in hardship programs with a special code indicating "no information" or "deferral," which does not hurt their credit.
However, this is an industry standard rather than legally binding law, so lenders can ignore it, resulting in negative marks for consumers, said Chi Chi Wu, the director of consumer reporting and data advocacy at the National Consumer Law Center.
Read more: This government shutdown could be the longest ever - maybe running until Thanksgiving. What might the economic damage be?
Because the guidance isn't enforceable, a consumer's ability to fix the inaccurate negative credit reporting is limited and difficult. Consumers can be proactive by getting all hardship terms in writing to protect their credit, but the risk remains.
Still, Wu said, those facing dire straits due to the shutdown should prioritize essential needs like their mortgage or rent over immediate credit preservation.
"If your back is against the wall and you don't have enough money to pay all of your bills as a federal worker, pay the bills that are the most important, credit be damned," Wu said.
Think long term
With continuing uncertainty over how long the shutdown will last, Kates said, it's important to map out a plan beyond the relief options offered by your financial institution.
Most programs, like those that allow borrowers to defer a single payment, are designed to offer short-term shutdown assistance and assume the worker's income will stabilize after a few weeks. Many are not built to defer multiple payments or several months' worth of fees.
Read more: The government shutdown is reaching a tipping point that could send the economy into a downward spiral
To brace for the possibility of a longer-than-expected shutdown, consumers using hardship programs may need to look into secondary resources that can provide a "backstop," he said. "The job doesn't end by entering one program."
Beyond financial institutions, the Federal Employee Education and Assistance Fund provides a list of additional resources.
Over a million employees going without pay
About 670,000 federal employees are furloughed and 730,000 are working without pay, the Bipartisan Policy Center estimates. If the shutdown extends to December, 4.5 million paychecks will be withheld from civilian employees, representing about $21 billion in missing wages.
Military servicemembers are at risk of going without their first paycheck on Friday, according to the organization, which would be the first time in history that all military members go unpaid due to a shutdown.
The American Bankers Association has compiled a noncomprehensive list of banks of all sizes that are offering relief options for federal employees, which has received 35,000 page views so far, according to the trade group.
Read more: Are you a federal worker not getting paid during the government shutdown? 4 ways to protect your finances.
As of Tuesday, 81% of American credit unions were offering deferred payments on existing loans and 71% had launched new or modified relief programs, according to the trade group American Credit Unions. More than half are waiving fees or penalties and offering financial counseling or budget-management support.
Sen. Bernie Sanders, a Vermont independent, has a list of resources for federal workers, including relief options from credit unions, available on his website.
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-Genna Contino
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October 31, 2025 08:00 ET (12:00 GMT)
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