When you stop getting a regular paycheck, it can become very easy to rely on things like loans and credit to get by. Though this might seem like the most feasible option to get by, it is actually the worst thing you can do financially. The misuse of credit cards and loans can lead to a poor credit history along with a hefty bill you’ll be entitled to repay. Below are ways to manage your credit card while unemployed:
Stop Using Them
Whether you have an available limit of $200 or $2,000, if you don’t have the money to pay the monthly bill on a credit card, you really shouldn’t be using it. For every month that you don’t pay for the card, you’re looking at a red flag on your credit report along with accrued interest, fees, and penalties. Avoiding use of the cards for a while allows you to pay down the balance, improve your credit, and stay out of debt.
If, for some reason you need to use the credit card (like in between unemployment payments), make sure that you do so wisely, and sparingly. While it isn’t wise to spend your credit card balance on a night of fun, it can be wise to spend your credit card on groceries until you get your unemployment benefits or to cover the cost of a household or family emergency.
Don’t Skip Payments
If you have credit card accounts with a balance on them it is imperative that you don’t skip the payments. Skipping monthly payments can ruin your credit and increase the amount of debt you have to deal with while unemployed. Your best bet is to try every month to pay the minimum balance due. For many cards, the minimum balance is between $20-50 per month.
Your unemployment income should be enough to cover the minimum monthly payment amount. You can determine if you qualify for unemployment and how much you’ll receive by checking the requirements in your state. So, if you live in Arizona, you’d check unemployment eligibility in AZ. If you’re eligible, be sure to apply sooner rather than later so you can secure the funds to cover those credit card payments.
Contact Them When There’s Trouble
Though you may have qualified and started receiving unemployment, it may still be challenging for you to make payments on your credit card accounts. Rather than ignoring calls from the creditor, talk with them and explain your circumstances. They are human too and can understand you not being able to pay the bill due to unforeseen circumstances. Your credit card company can help you with a payment arrangement or even see if you qualify for a credit hardship program. Whatever the outcome is, creditors prefer some form of communication as opposed to them having to chase you for a response.
If your credit card debt was out of hand prior to you losing your job then it would behoove you to consider consolidating your debt to reduce the blow your finances and credit will take for past due accounts. A debt consolidation loan may be a bit difficult to get while unemployed, but it’s still worth a shot. This will put all of your credit cards into one easy payment you can afford. If not, you could also consider applying for a zero-interest balance transfer card where you can transfer your old credit card debt and pay it off with zero interest.
As if managing credit cards wasn’t complicated enough when you had a nine to five, you can rest assure that it will take some getting used to. To prevent yourself from falling further into debt or ruining your credit it is imperative to get a grasp on your finances. Using these tips to manage your credit cards will ensure that this is at least one debt you won’t have to stress about as you learn to survive on unemployment.