By Karen Lynch | American Express Credit Intel Freelance Contributor
4 Min Read | July 17, 2020 in Money
Managing credit card debt is one of many financial challenges you may face if you’ve lost your job.
It’s a good idea to consider all of your options – there might be some help available to you, particularly during an economic downturn, for example.
With patience and perseverance, you could delay some of that debt without any penalties.
Losing your job can present daunting challenges, especially in the midst of an economic downturn. Putting more of your day-to-day spending on your credit card may seem like a solution to cash-flow problems since it allows you to push out the date when you actually have to pay for life’s essentials. But credit card debt has to be managed carefully. Otherwise, pretty quickly, you can find yourself owing more than you bargained for in debt, interest, fees, and penalties.
Here are some tips from the Consumer Financial Protection Bureau (CFPB), consumer advocates, and other financial experts, about how to manage credit card debt after a job loss.
Your first priority after losing a job may be to hold onto whatever cash you’ve got – not worrying about paying debts. However, instead of avoiding bills coming in, you might end up better off if you talk through your situation with the companies you owe money to.
Washington has been known to encourage credit card companies, banks, landlords, and utilities to consider hardship relief for people affected by economic downturns.1 But it’s not usually automatic – you have to ask. Your credit card company might help with lowering your monthly payment, waiving late payment fees, or other accommodations.
A survey on the early 2020 economic downturn showed that about 90% of credit card members were able to get some relief if they called their card companies to ask for it. But only 30% of card holders actually called.2
Here are a few things to keep in mind when contacting your card company:
The CFPB suggests you have the following information on hand before you call your credit card company:
It’s also a good idea to stay on top of other basic credit card management details such as:
You might be able to conserve a little cash by combing through your credit card statement itself. Here are some examples:
Losing your job during an economic downturn raises many questions about your current and future finances. Your credit card company could help answer at least some of the challenges you face and may help provide some temporary relief from credit card debt. Additionally, credit counselors are available through the CFPB website and elsewhere to help with these and other questions.7
1 “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus,” Jointly issued by six U.S. federal financial agencies
2 “Credit Cards and Coronavirus: An FAQ,” LendingTree
3 “What to Do if You’re Having Trouble Paying Bills,” Consumer Reports
5 “Protect Yourself Financially from the Impact of the Coronavirus,” Consumer Financial Protection Bureau
7 “What is Credit Counseling?,” Consumer Financial Protection Bureau