Prompt action can prevent problems later
Credit Card Tips after You've Lost Your Job
by Bill Hardekopf, CEO of LowCards.com
Job Loss Lessons
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Unfortunately, job loss has become a reality for millions of Americans. Your income may end, but your expenses do not. There is no magic wand to make the bills or the bill collectors disappear, but there are some smart financial steps you can take regarding your credit cards:
- Contact the credit card company immediately. Let them know that you have lost your job, and see if they offer any type of relief. They will probably be more willing to work with you if they are notified before they spot a problem.
- Maintain your minimum payments. Pay the monthly minimum so you don't damage your credit score and incur penalty fees. You may not want to make bigger payments to pay down debt during this time. Instead, put that cash into an emergency fund.
- Cut spending and switch to cash. When your income drops or stops, you have to cut spending and expenses. Paying cash will make you feel the pain of each dollar that leaves your wallet, causing you to think twice before spending it.
- Credit cards are not a replacement for your salary. Eliminating the use of your credit card will prevent you from falling further into debt and destroying your credit score. If you can't afford to pay cash for a purchase, you can't afford the additional interest payments.
- Avoid cash advances on your credit card. Cash advances may be quick and easy, but they also charge high interest rates and fees. Some cards charge nearly 25% APR for cash advances.
- Check out hardship programs. Some banks offer these for lost work, severe injury, or family deaths. You may have part of your balance forgiven, or you may be able to delay payments for a few months while you find work.
Would you like to
pay off your credit cards
in less time
for less money?
Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.
Take the Next Step:
- Visit the TDS library for more on handling job loss.
- Are you heading for debt trouble? This simple checklist can help you determine just that and point you in a better financial direction.
- Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!
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