A lot of people have faced job losses owing to coronavirus. This has led them to worry about their bills. The situation becomes all the more serious if you have credit card debt and no or very little emergency savings. Your credit score can greatly suffer when you lack the income to pay your credit card bills. People who are extremely low on credit can also consider bad credit credit cards to get started on the journey of building a good credit history.
Nevertheless, there are ways in which you can prevent any damage to your credit card and also manage your payments in case you have suddenly lost your job. You can follow some effective credit card tips after losing your job and make sure that you get yourself out of the tough times. When you are laid off, you might get a severance payment depending on the length of your employment and the amount of money you have earned. Severance payment functions as a financial link from one job to the next in case your unemployment period is short. If you get severance pay, utilize that money in a wise manner in the weeks or probably months once you lose your job. You would need it to cover any monthly loan and credit card payments that you cannot defer.
How to prioritize your payments? When you lose your income, it can be tough to face the reality of cutting out the pleasurable parts linked with your lifestyle. In case you have cut unnecessary expenditures from your budget, you will possibly have sufficient payment to make the minimum payments on your loans and credit cards. This implies carrying credit card debt from one month to the next but it is still better than missing payments. If you are still unable to make all of your debt payments, you would have to prioritize your secured debt payments. Secured debts like mortgages and auto loans are different from unsecured debt like credit cards as a lender can seize your collateral in case you are not able to make timely payments.
Ways to pay down your debt if you are unemployedWhen you have lost your income and are required to pay credit card bills, certain options can be considered better than others. You might need to consider balance transfer credit cards, home equity line of credit, IRA withdrawals or 401(k) loans. Here’s a look at these options:
Balance transfer credit cards: In case your credit score is strong, you can qualify for balance transfer credit cards that can easily buy you time so that you can pay down your balances without any interest. But stay wary of balance transfer fees and be prepared to pay off the debt before the kicking in of regular interest.
Home equity line of credit: As long as you are able to manage the payments, home equity loan might be the most favorable choice to pay down your credit card debt. The rates of interest are generally lower than rates for credit cards or personal loans. This is one of the best credit card tips after losing your job Retirement funds: This option carries with itself the maximum amount of risk as you face penalties for early 401(k) or IRA withdrawals. This is an expensive and risky way to borrow money and you can lose your retirement income. Before you take from your retirement fund, think long and hard.
You can also utilize the services of a credit counselor if you are not able to keep up with your bills and require assistance with budgeting, reviewing expenses and debt or negotiating with creditors.
A lot of people have faced job losses owing to coronavirus. This has led them to worry about their bills. The situation becomes all the more serious if you have credit card debt and no or very little emergency savings. Your credit score can greatly suffer when you lack the income to pay your credit card bills. People who are extremely low on credit can also consider bad credit credit cards to get started on the journey of building a good credit history.
Nevertheless, there are ways in which you can prevent any damage to your credit card and also manage your payments in case you have suddenly lost your job. You can follow some effective credit card tips after losing your job and make sure that you get yourself out of the tough times. When you are laid off, you might get a severance payment depending on the length of your employment and the amount of money you have earned. Severance payment functions as a financial link from one job to the next in case your unemployment period is short. If you get severance pay, utilize that money in a wise manner in the weeks or probably months once you lose your job. You would need it to cover any monthly loan and credit card payments that you cannot defer.
How to prioritize your payments?
When you lose your income, it can be tough to face the reality of cutting out the pleasurable parts linked with your lifestyle. In case you have cut unnecessary expenditures from your budget, you will possibly have sufficient payment to make the minimum payments on your loans and credit cards. This implies carrying credit card debt from one month to the next but it is still better than missing payments. If you are still unable to make all of your debt payments, you would have to prioritize your secured debt payments. Secured debts like mortgages and auto loans are different from unsecured debt like credit cards as a lender can seize your collateral in case you are not able to make timely payments.
Ways to pay down your debt if you are unemployed
When you have lost your income and are required to pay credit card bills, certain options can be considered better than others. You might need to consider balance transfer credit cards, home equity line of credit, IRA withdrawals or 401(k) loans. Here’s a look at these options:
Balance transfer credit cards: In case your credit score is strong, you can qualify for balance transfer credit cards that can easily buy you time so that you can pay down your balances without any interest. But stay wary of balance transfer fees and be prepared to pay off the debt before the kicking in of regular interest.
Home equity line of credit: As long as you are able to manage the payments, home equity loan might be the most favorable choice to pay down your credit card debt. The rates of interest are generally lower than rates for credit cards or personal loans. This is one of the best credit card tips after losing your job
Retirement funds: This option carries with itself the maximum amount of risk as you face penalties for early 401(k) or IRA withdrawals. This is an expensive and risky way to borrow money and you can lose your retirement income. Before you take from your retirement fund, think long and hard.
You can also utilize the services of a credit counselor if you are not able to keep up with your bills and require assistance with budgeting, reviewing expenses and debt or negotiating with creditors.