Unemployment and Credit Card Debt

 Man in business suit holding cardboard box with plant in it.

There is never a good time to lose your job unexpectedly.

When paychecks stop, regular payments that seemed manageable can quickly feel insurmountable. Those who suffer from the growing weight of credit card debt have an added anxiety. Each missed payment creates more debt and negatively impacts your credit score. You may become unsure of how to properly use your now limited funds. Luckily there are things you can do to navigate both your unemployment and your credit card debt.

Reestablish Your Budget

The monthly budget you were using before your unemployment no longer applies to your current financial situation. Sit down and reestablish your budget with your new constraints. Less necessary expenses such a vacation fund or a high-end gym membership will need to take a back seat to life’s needs. Reallocate those funds to areas like rent, utilities, car payments, and credit card debt. It may be less fun, but it will stretch your savings over a longer time. After establishing the necessities, see if you can lower payments even more. For example: if your credit card debt reduction plan included paying more than the monthly minimum; transition into paying the least amount possible for a few months.

Talk to Your Creditors

Some people may be embarrassed by their unemployment and try to hide the news. The instinct is natural but it’s not the best way of dealing with your credit card debt.

If your savings cannot handle your credit card payments on top of your daily necessities, reach out to your creditors for an open conversation. Being honest with a clear explanation of your current situation is vital. Some creditors offer hardship programs designed for this very thing. Depending on your situation, solutions may be lowering monthly payments or halting them all together. Be careful when entering these programs. They are only designed for short-term use. The payments may stop or lower, but your interest will continue to incur.

Avoid Using Your Credit Card

Credit cards can seem like a quick fix when incoming funds dry up. They may be useful in an emergency, but using them as a life raft can have disastrous outcomes. It is always challenging to predict the length of your unemployment. Using your card for only one month can quickly turn into relying on it for 4 or 5. The safest move is putting your credit card away for the duration of your unemployment. As mentioned earlier, sticking to a monthly budget is best practice. As you increase your credit card debt, you’re also increasing your monthly minimum payment. This expense can quickly balloon, putting your monthly budget in jeopardy.

Talk to a Credit Counselor

You’re not alone during this financially precarious time. If planning your budget and dealing with creditors feels overwhelming, contacting a nonprofit credit counseling agency with a certified credit counselor, like CreditGUARD, can help alleviate many worries.

Our experts are well versed in every aspect of debt and debt management, including during unemployment, provided you still have income of some kind.

Without income, we may be able to help with a budget, but you will not qualify for our other programs.

You may feel like you’re the only one to deal with this, but you’re not. At CreditGUARD, we’ve helped many other debt suffers in the same situation.

Call us today at 800-500-6489 to learn more about how we can help you with budgeting and creditors during unemployment and to find out about our financial education programs and debt management programs.


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