When you’re unemployed, managing your money well becomes more important than ever. Ideally, you’ll receive enough in unemployment benefits to get by, or you’ll have an emergency fund you can use to pay your living expenses until you find a new job.
But if your savings start to run low, you might need to use credit cards to cover your bills. Under normal circumstances, it’s best to pay your credit card bill in full to avoid debt and interest charges. That’s not always an option during unemployment, though. If you can’t pay in full, you’ll need to carry a balance from month to month.
Even though this is a difficult situation, there are some smart things you can do to keep debt and fees to a minimum. Here are a few tips that can help if you’re relying on credit cards during unemployment.Save: This credit card has one of the longest intro 0% interest periods aroundMore: Save while you pay off debt with one of these top-rated balance transfer credit cards
1. Get a 0% APR credit card
If you know you’ll need to carry a credit card balance, the best option is to apply for a 0% APR credit card. This type of card has an introductory APR of 0% on new purchases. For as long as the intro period lasts, the card issuer won’t charge you any interest. You only need to make the minimum payment every month.Many of the top 0% APR credit cards offer intro periods of 15 months or longer. That means you’ll have plenty of time to finance purchases without racking up expensive interest charges
2. Only use credit cards for the essentials
You don’t want to take on any more debt than necessary. To keep your burden to a minimum, reduce your expenses as much as possible. Steps to take here include:
Stop going out for dinner or drinks. Stick to low- or no-cost activities for the time being.
Get rid of streaming services and other subscriptions. There are several free streaming services you can use as a replacement.
Cut your grocery spending. Look for recipes with inexpensive ingredients, and start using coupon apps.
3. Don’t miss any payments
Even if you can’t pay your credit cards in full, make at least the minimum payments on time. A missed payment means the card issuer can charge you a late fee. If it’s the first time this happens, you can likely contact your card issuer and get that fee waived. However, card issuers typically only do this for you once.
4. Prioritize paying cards with higher APRs
One of the dangers of credit cards is that most of them have high interest rates. However, these vary from card to card. To keep interest charges as low as possible, pay as much as you can on cards with higher APRs. If you need to carry a balance, do it on whichever of your cards has the lowest APR.
5. Tap into your credit card rewards
If you have rewards credit cards, see how you can use those rewards to save money, either on regular expenses or your credit card bill. This is easy with cash back cards, because you can use your cash back as a statement credit, reducing how much you owe.
