With unemployment at more than 26 million, now is the time to plan for the worst
Foster City, CA – April 23, 2020 – Unemployment just passed 26 million. For those that haven’t lost their jobs from the COVID-19 pandemic, they’re likely concerned it could happen. A leading site in credit card ratings compiled seven steps consumers can follow to ease the financial burden if their job is in jeopardy:
- Pay down debt while you can - this is easier said than done, but if there's ever a time, it's now, while you still have an income.
- Add to your emergency fund - having one is vital when you're unemployed, so add to it if possible to help make ends meet in the event of a job loss.
- Check your eligibility for a 0% APR credit card - many cards offer new holders an introductory period of 0% interest on purchases. If you think you’ll need a few months of paying regular expenses before getting back on your feet, a 0% offer could save significant amounts of money allowing time to find a new job and pay off debt before interest charges set in.
- Transfer your balance to a low-APR card - if you can roll over your existing credit card debt to a card with an introductory 0% interest rate, it can give you time to catch your breath by not having to pay as much of a monthly balance. There are options with intro balance transfer offers as long as 18, or even 21 months.
- Don't tell your credit card issuer you've lost your job - once you hint that your job is in trouble or nonexistent, you could find your credit line reduced or even your interest rate raised. If the job loss is temporary – perhaps you’ve just been furloughed during the COVID-19 restrictions - and you feel you’ll be able to manage your credit, the bank won't care as long as you stay current on payments.
- Don't use your credit cards to maintain your current lifestyle - it’s worth noting that credit cards should only be used for emergencies and necessities.
- Don't use your credit cards for a cash advance - credit card cash advances are almost never a good idea. The interest rates are often higher than those for regular purchases and the interest begins accruing immediately rather than after a grace period like it does for purchases.
Read more here: Shaky job? 7 ways to manage your credit
Brooklyn Lowery, the credit card expert and senior editor for CardRatings.com, is available for comment.
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