Losing your job can be pretty scary at times. As a matter of fact, it can be downright terrifying in certain situations. You’re not sure how much time will past until you manage to get a new job and what’s worse, you may have to wait months to receive your unemployment insurance payments.
During this period, mishandling your credit cards can be easy. You may feel tempted to tap into a line of credit, in order to keep your old lifestyle. However, before you plunge into debt, you should take a break, and read these four credit card tips.
Only Spend Money on Priorities
For starters, you need to make a daily budget. Once you’re done with it, you need to prioritize it. This means that first, you need to spend money on crucial things like food and bills and leave some of the less important “luxurious” things for later.
So if you have some funds left after you pay the bills you can afford to spend a few dollars here and there on certain luxuries. But make sure that you have enough money to access transportation because you’ll need it to go to job interviews.
Talk to Your Credit Card Company
Now, if you feel that you’ll need to let a payment go late during this period, you need to contact your credit company. Thankfully, most credit card processing companies are surprisingly helpful in these situations.
Some will allow you to lower your monthly payments, while others will even allow you to change your payment due date to suit your circumstances. Just remember to call your lender – even the non-credit ones – before you miss out on any payments.
Get Familiar with Your Credit Card’s Terms
Now, before you go out charging up your debt, you have to know how low or high your interest rate is. What’s more, you need to check the credit terms on things such as cash advances and over-limit fees. A cash advance, for instance, may seem attractive in this situation, but they usually come with huge fees.
Most cash advances have a fee between 2% and 5% of the sum you borrowed, plus a 20% interest rate. Therefore, you should avoid getting a cash advance by all means necessary.
Try to Make Your Minimum Payments
As soon as you go through all the previous steps, you need to make sure that you’re able to make your minimum payments. Even as your financial situation changes, try to keep your credit company updated – especially if you can’t make your minimum payment.
If the situation worsens, don’t be afraid to call the company again and try to re-negotiate everything again. Lastly, don’t forget to keep an eye on your credit at all times. This will remind you to use your credit card maturely.
Final Thoughts
Of course, before you even touch your card, you should work out an emergency budget. That means you should strip away anything that you feel is unnecessary – including tiny luxuries like your Netflix subscription and the occasional coffee.
Remember – during normal time, these expenses won’t break your budget – however, during unemployment, you should try to save up every single dollar you can.
