Credit Card Tips After Losing Your Job

Credit Card Tips After Losing Your Job

June 14, 2020         Written By Tracy Farnsworth

One of the most frightening events you can face is the loss of a job. Even temporary unemployment causes tremendous worry. You still have bills to pay, but your income is gone or reduced. Unemployment pay takes time to apply for and receive, and even then, it is not always going to be the same amount you were receiving with your normal paycheck.

There is no magic wand that can make your bills disappear. Your home, care, utilities, and credit cards still need to be paid. While you can not stop these bills from coming to you each month, these financial measures can help you avoid financial strain if you can not pay your credit card bills.

#1 – Reach Out to Your Credit Card Company

As soon as you have been informed of a layoff or reduced workweek, contact your credit card company. Do not delay this financial step. Companies would much rather have you inform them ASAP, even if you find something else before you need the help. If you wait until there are problems, the impact is going to appear on your credit score. Many credit card companies have programs in place to help their customers. These are some of the options that have been used to help unemployed people.

Deferred Payments: You should ask if payments can be deferred. Some companies are deferring payments for cardholders who are affected by layoffs. You will still owe the money, but you do not have to make payments until you have a new job or unemployment pay starts coming in.

Halt on Overdue Accounts: Another way credit card companies may help is by halting any activity on your credit card account that shows you are overdue if you have been unable to make a payment.

Reduced Interest Rates: Some credit card companies reduce the APR for credit card holders, which helps lower the minimum payment. Learn how to ask for a lower credit card interest rate.

Temporary Elimination of Late Fees and Over-the-Limit Fees: You should ask if the credit card company is going to cease late or over-the-limit fees for now. Some will temporarily halt the collection of late fees for workers who have lost their jobs. You may still be charged interest on your unpaid balance, but late fees and over-the-limit fees may not add to your balance.

#2 – Make Minimum Payments

Do everything possible to make your minimum payments. By paying the minimum amount, your credit score is not harmed at all. It may not be as much as you would hope to pay, but you must focus on protecting your credit history as much as possible. If you can not make the minimum payments on every card, make them on as many as you can. The next month, try to catch up on the minimum payments you could not make. It also helps to pay something, even if it is not the minimum payment. While it will not stop you from accruing late fees and interest, it will at least cut down on how much you will need to make up when you do return to work.

#3 – Trim Unnecessary Expenses

Now is a really good time to look at your monthly budget and expenses to figure out what you can trim. You should stop eating out as much as possible. If you smoke, try to quit smoking. You may find your health insurance or state department of health provide free cessation products to help you. Don’t buy alcoholic beverages as they will reduce the money you have coming in each month.

If you pay for an internet and cable package, consider how often you watch TV. Are you getting your money’s worth? Marketwatch took a closer look at hundreds of cable bills from people around the country. The average monthly bill was just over $217. Discounted promotional rates can lower the cost, but most expire after a year or two. At that point, you’ll pay full price unless you can negotiate a lowered rate again.

It can be a lot cheaper to pay only for the internet and cut the cord. With a streaming device like Roku or Chromecast, a game system, or a smart TV, there are free TV and movie channels out there. You can also sign up for channels like Disney+, Hulu, or Netflix for a small monthly fee. Many offer free trials so that you can see which better suits your needs.

If you do sign up for streaming plans, do not put them on your credit card. Instead, sign up with an alternative payment method like an e-wallet and make sure you always have the money available when the bill is due. That keeps you from building interest on those monthly subscription fees. Many of them take payment methods like PayPal.

With the money you save, use the savings to keep up with your credit card payments. Do not be tempted to use the savings for entertainment and dining out. Pay your credit card bills and save anything that is left over. You want to start building a savings account for emergency expenses.

#4 – Do Not Take Out Cash Advances

As tempting as it can be to take out a cash advance on your credit card, do not do it. The interest rate for a cash advance can be much higher than you’d expect. It is not always going to be the same interest rate that you get for purchases. Cash advances also can have high processing fees. When you apply for a new credit card, free cash advances may be part of the offer. Once you are an established cardholder, free cash advances are rare. They are expensive and can lead to extra debt.

#5 – Do not Use Your Available Credit as Your Missing Income

You may be tempted to rely heavily on your credit cards while your income is reduced. Do not use your available credit to replace your missing income. It may be hard to avoid using your credit cards at all but avoid it as much as you can. Instead, think outside the box and come up with extra ways to get cash.

#6 – Find Extra Ways to Get Cash

Come up with extra ways to increase your cash flow. If you have been building up bottles and cans and live in an area where they are refundable, redeem them for the deposit. If you have 200 cans and get 5 cents per can, that is $10 you can put towards gas in your car. You can also collect cans and bottles people throw out their windows. You are helping clean up the environment and getting a little extra cash at the same time.

You can also make some cash by trading in unused cellphones and electronic devices, empty toner cartridges, and books. Look for buyers online. You may not get a lot of money, but every penny can help when you’re unemployed.

Check into sites like Amazon’s MTurk, Fivver, and UpWork to find small jobs you can do from home that bring in some extra income. These small jobs can be as simple as participating in a survey to fixing errors in the text. It is not going to bring in a lot of income, but it can help. Do check into your unemployment rules to make sure these small jobs will not affect the amount of unemployment pay you receive.

The money you do gain should go into a cash fund that you use for spending at stores. You will want to pay with cash as much as possible to gain better insight into where your money goes.

 #7 – Pay With Cash

Stop using a debit or credit card to pay for things. Budget your bills from the money you do have coming in and pay important bills like rent/mortgage, utilities, car payments, insurance, and credit cards. Take out cash for other expenses like groceries, gas for your car, and personal expenses. Use only that cash. When you find yourself running out and unable to afford the things you want with cash, it can be a wake-up call that helps you better understand the importance of the money you have in hand. This is a great way to stop splurge purchases.

#8 – Look Into Hardship Programs or Grants

There are hardship programs and grants that may help you. Hardship programs are available from banks to help customers who lose a job, suffer a grave injury that makes it impossible to work, or some other form of hardship. You may qualify for one, so it is important to ask. If you do not qualify, at least you tried. If you do qualify, you will have a helping hand to get you through a hard time.

Visit USA.gov for additional assistance with hardship. The government site has loans, grants, and benefits that can help ensure you have food on the table, a roof over your head, and help with some bills.

Unemployment can be a stressful, trying time, but do not let it overwhelm you. Just remember that reaching out for help is important. Do not let your pride keep you from asking for a helping hand at a time when you need it most. Start with your credit card company and continue from there.

The information contained within this article was accurate as of June 14, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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tracy

About Tracy Farnsworth

Tracy Farnsworth went straight from a business track in high school to a full-time job in mortgage banking in Burlington, Vermont. After having children, she built a freelance career in content writing and took online classes as time allowed. She completed Social Media Marketing and Digital Marketing certificate programs with Ireland's online Shaw Academy and completed several courses in SEO and analytics. In her free time, she's the “mom” to a very clingy rat terrier, and the pair walk at least a mile every day. She's also a novice baker who is trying to master the art of sourdough bread.