Here Are 5 Responsible Ways to Use a Credit Card During Unemployment

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  • If you don't think you'll have enough money saved to last during unemployment, apply for a credit card with a 0% intro APR.
  • Only use your credit card for necessities, and always pay the bill on time.
  • Check if you have any credit card rewards you can use to cover expenses or lower your credit card bill.

Credit cards could help you get by while you look for a new job, if you're careful about how you use them.

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.

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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.

You might be wondering if you can get a credit card while unemployed. The answer is yes, provided you have some form of income. This doesn't need to be income from a job. You can include any money you can reasonably expect to access, such as unemployment benefits, a spouse's income, or child support, to give a few examples.

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.

It's never fun to get super strict about your spending. But the goal here is to make your money last and to add as little credit card debt as possible. Keep in mind that this is a temporary measure, and you'll be able to loosen up once you have a new job.

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.

What if you can't make your card's minimum payment? Call the card issuer at the number on the back of your card and ask about hardship programs. The credit card company may be able to work with you and lower your payments or temporarily defer them.

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.

For example, if you were able to get a 0% APR credit card, put your spending on that first. You're better off carrying a balance on a card charging 0% interest than a card charging 20%.

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.

It's trickier with travel credit cards, but you may still have options. For example, some travel cards let you redeem your points for gift cards. You could potentially use your points for a gift card with Kroger, Target, or Instacart, and then use it to buy groceries. There are also travel cards that let you use your points for cash back. You usually don't get as much value for your rewards this way, but that's not important in an emergency.

Being able to borrow money using credit cards could help you keep your bills paid while unemployed. Once you've found a new job, just make sure to pay off your credit card debt as quickly as possible so it doesn't keep costing you interest.

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