Living with Credit Card Debt When You Don’t Have a Job

For most people who lose their jobs during a recession, the very first priority is to cut back on their regular spending abilities. After all, it is the logical thing to do. By reducing expenses for nonessential items while sending your resume everywhere, you could get your financial situation back on track.

Companies like Alamo Associates, Colony Associates & White Mountain Partners have been aggressively marketing ways to pay off credit card debt.

Here, it is pertinent to note that your credit card bills cannot be ignored, and you will have to make at least minimum payments irrespective of your current financial situation. Sometimes, a person makes a choice to pay the food and power bills and forgoes the minimum payment on his credit card debt. This, however, is not a very smart thing to do since missing even a single credit card payment can easily cost you a whole lot of money due to snowballing interest. Credit card consolidation loans are also something a person can consider if there are multiple cards with balances on them.

But it does not have to be this way at all.

Many credit card companies offer help to laid-off cardholders. After all, they want to recover their money and they certainly derive no pleasure in tormenting their customers. Some companies offer various hardship programs that have been designed to help jobless customers make their monthly payments. Here is what every struggling and laid off customer should know with regard to his credit card debt.  

Check Which Credit Card Company Offers a Hardship Program

In case you do not have a job at this point in time and don’t have any viable source of income, the credit card issuing company may be able to help you by reducing the minimum monthly payment or lowering the interest rate or both. You can check for their hardship programs by calling them directly or checking their website. If they don’t offer these services, you should still visit the bank and talk to someone in customer support. There might be a chance that they offer something but are discreet about it so that people won’t take undue advantage of their offer for reducing credit card debt.  

What Can You Expect If You Stop Paying Your Bills Completely? 

Suppose you find yourself in a situation where you are not able to pay off your credit card debt. In this case, you should try your level best to at least make the bare minimum payment on time. If you can’t even do that, you will be in a load of trouble.

If you are not part of an assistance program, you can count on being hit with late fees charges as well as an annual percentage rate (APR penalty). This means that your credit card service provider will raise the cumulative interest rate on your total unpaid credit card debt or balance. Once the penalty APR has been issued, it is very likely that it will last for a minimum of 6 months even if all subsequent payments are made on time.

But these are only the short term scenarios. If we look at it as a long term proposition, we can easily see that skipping payments can really hurt your overall credit rating score. This rating is typically based on the regularity of your payments. If you mess up your score, it will be very difficult to get credit because you will be labeled a high-risk borrower. Under the circumstances, whenever you apply for a loan, you will have to pay very high interest to justify the risk for the lending agency. Then, there is the very real risk of facing the wrath of credit card debt collectors. First, they will start calling you and later on they will come to your home as well. 

Increasing Credit Card Debt When You Are Unemployed

It is common sense to refrain from using a credit card to make purchases when you can’t afford even minimum payments. The privilege of using a credit card comes with a set of responsibilities, not least of which is to maintain a regular monthly payment schedule that includes both principal amounts and interest payments. This means that you should never use your credit card to pay for expenses that you cannot cover in cash. The best thing to do is to start creating a tight budget while trying to generate fresh sources of income.  

Unfortunately, there may come a time when you might be forced into credit card debt because this is the only financial lifeline available during a period of unemployment. If you don’t have a nest egg for troubled times, you will be forced to use your credit cards.

Here, it is also important to keep in mind the fact that whatever you purchase now will have to be paid back with interest a few months down the road.

Try to Make Regular Payments on Your Credit Card Debt

If you are currently going through a period of financial hardship and simply have to use a credit card, you should try to make regular minimum payments at the very least. This will help you avoid higher APRs, late fees surcharges, and also keep your credit rating intact. It is also a very good idea to reach out to your credit card service providers to check and see what they can do for you during your hard times.

Pulling money from the retirement fund is an extreme step. You can also take out a mortgage on your home or other large assets (if you live in your own home) and pay off all the outstanding credit card debt. However, it is always better to try and tighten your fiscal belt and find a new job.


If you are still considering using multiple credit cards to cover your income gap during your unemployment period, it is very important that you realize that you are simply piling on extra debt that you will have to pay off sooner or later.

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