Can’t Pay Credit Cards Unemployed

Should I Consolidate Debt While Unemployed

The prospects for debt consolidation while unemployed are admittedly less than someone with an income. Some creditors may not be willing to issue new debt consolidation loans for bad credit or unemployed individuals. Creditors may also be hesitant to issue a balance transfer credit card without proof of income. Thats because creditors want to know that you can repay the loan without issue.

If you have an excellent credit score and a strong history of on-time payments, your existing creditor could be willing to work with you to move balances to a balance transfer credit card. But since these cards often come with one-time fees, youll need to assess the benefit against the cost.

If you were pre-approved for a debt consolidation loan before losing your job, the lender might still issue a loan, albeit with a higher interest rate. You may also have a greater chance of being approved for a debt consolidation loan if youre willing to put up collateral like a car or home to secure the loan.

Listing Income On Your Application

Think about the income youâre relying on to get by while youâre unemployed. If youâre over 21, the allows you to list any household income to which you have a âreasonable expectation of access.â This includes income from your spouse or partner as well as sources of nonwage income such as investment returns or Social Security payments. If youâve lost your job, you can include unemployment benefits on your application.

» MORE:25 ways to make money online, offline and at home

The Credit Card Act of 2009 allows you to list any household income to which you have a âreasonable expectation of access.â

Getting approved for a credit card depends on your income, your credit history and your debt-to-income ratio, which is your current debt payments as a percentage of your income. If youâre approved, your credit limit will depend on your income and debt-to-income ratio.

The Credit Card Act requires lenders to consider your ability to make your payments when you apply for a credit card. Thats why some of them also look into your payment obligations such as your rent or mortgage, alimony or debts.

Apply For A Student Loan Payment Plan

If you can’t make your student loan payments, a variety of options are available to you. In most instances, you need to take action before you fall too far behind. The options differ based on the type of loan you have. Consolidation might help, but it might also limit your options. Contact your lender or servicer to learn more.

Read Also: How Does Unemployment Work In Ct

How To Use Your Credit Wisely

To buy something on credit is to get it right away with the trust youll pay for it later. Much like a regular loan, a credit card provides flexibility to the consumer but comes with consequences if the trust of repayment is broken, including penalties, heavy interest and credit score damage.

Your is a lifelong report card as youll need a solid score to apply for loans and leases. If you ever want to buy a house or car, rent an apartment or even get a job, thinking about and protecting credit now is a wise move.

Anyone applying for a credit card should only do so if they have a way to pay the bill. A credit card should not be used to buy things you cant afford without using credit and generally should not be used for cash advances, but especially not ones that cant be paid back immediately. Cash advances usually begin incurring interest immediately, unlike purchases which often have a 30 to 60 day grace period before interest begins to accrue.

Everything You Should Know When Applying For A Credit Card Online

You can typically apply for a credit card online in a few simple steps, but its important to get the facts about what is included in an online card application. To make the process easier, gather all the information you need before you get started.

• Who can apply online for a credit card
• What you need to submit a credit card application
• How to apply for a credit card online
• How credit card applications affect your credit
• Getting started: apply for a credit card online

Recommended Reading: Tennessee Unemployment Qualifications

Also Check: How To Win An Unemployment Appeal In Georgia

Personal Loan Lenders With Low Or No Income Requirements

If youre receiving unemployment benefits, you may still qualify for a personal loan. More lenders are willing to consider factors beyond your income alone, and some work with low-income borrowers. But keep in mind that some lenders may require you to demonstrate your ability to repay the loan.

These seven Credible partners lenders have flexible income requirements for a personal loan:

Take Out A Home Equity Loan To Pay Off Debt

Sometimes taking out a low-interest home equity loan, or line of credit is a great option. Just be careful that you are not heading towards bankruptcy. If you are going in that direction you may be putting your home at risk. It is good to note that you will need good credit to qualify for the best interest rates.

Don’t Miss: How To Get Unemployment Checks

Get A Debit Card That Comes With Credit Card Perks

The Aspiration Spend & Save account offers the chance to earn cash back when you use your debit card, as well as an annual percentage yield of up to 1% .

With Aspiration Spend, you can receive up to 10% cash back when you use your debit card to pay with select merchants that belong to the banks Conscience Coalition. Examples of retailers in the coalition include Toms, Warby Parker, Blue Apron, Arcadia, Inc., and more.

Other valuable features of an Aspiration Spend & Save account include:

• You get unlimited fee-free ATM withdrawals at more than 55,000 ATMs.
• Your deposits arent used to fund fossil fuel exploration or production.
• You can opt to plant a tree every time you swipe your debit card.
• You can manage your account from the Aspiration mobile app, which is available for iOS and Android.
• Your first set of paper checks is free.

Whats more, if you open a Spend & Save account and make $1,000 in purchases with your debit card in the first 60 calendar days after opening, youll receive a $100 cash bonus. to make sure you qualify for the bonus offer.

• Earn cash back rewards up to 10% when you spend with your debit card
• Get $150 bonus when you spend $1000 in the first 60 days
• Up to 5.00% APY interest
• Unlimited fee-free withdrawals at 55,000+ ATMs
• Deposits are FDIC insured

How We Make Money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout lifes financial journey.

Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.

Were transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.

Also Check: Can You Get Unemployment For Medical Reasons

Explore All Of Your Options

The ideal option is usually to keep making payments in full every month until your debts are all gone. Unfortunately, when your income is compromised this option may be impossible. Depending on how long you’re unemployed, you may find that a debt management plan or debt settlement make sense for your situation. Or it might be that bankruptcy makes sense for you.

Its not often that we advise bankruptcy, but the laws exist for a reason,” says Tuck. It can be a difficult process to navigate and it will likely damage your credit deeply, but that doesn’t mean it isn’t right for you. “Sometimes it is the only viable option, says Tuck.

If You Can’t Get Another Card Or Loan

You might not be able to get a card or loan if you don’t have a good credit score. This could happen if you’ve applied for lots of credit cards or missed a monthly payment.

You should check your credit score is right. You might be able to correct a mistake to improve your score and you wont make the score worse by checking. You can find out how to check your credit score on the Money Helper website.

Keep paying as much as you can on the old card. Talk to your credit card company and explain your situation. Ask them to freeze interest and other charges.

Read Also: How Do I Get Another Unemployment Card

Ask About Credit Card Hardship Or Deferment Programs

The more you can do to pause your debts during unemployment, the better. While the overall goal is to eventually pay everything off, once you start missing payments and becoming delinquent, paying off a debt gets harder and harder.

That’s why you should reach out to your creditors before you start missing payments. They may be able to place you on a hardship program or a temporary deferment. They also may not be able to help at all. You won’t know until you reach out for help, though, so check in with your creditors as soon as possible.

Carefully Consider Further Credit Card Use

You might be able to use your credit card to cover expenses, like groceries or other bills. But it might make sense to use your card sparingly and limit spending to essentials. You could also consider these options:

• Redeem credit card rewards. If you have a card with cash back, points or other user perks, it might be time to cash in on them. If youâre a Capital One customer, learn more about how to redeem your rewards.
• Adjust your payment dates. If it feels like all your bills are due the same day each month, you might be able to change when your credit card payment is due. Your new due date will take effect within two billing cycles.
• Make your minimum monthly payment, if possible. If you canât manage the CFPBâs recommendation to pay your credit card bills in full each month, consider paying as much as you can but at least the minimum payment. It could help you avoid paying extra fees.
• Apply for a balance transfer. A balance transfer could be a way to pay down an existing balance at a lower, more manageable interest rate for a limited time. This period could be anywhere from six months to two years, depending on the card and the offer. Youâre still on the hook for minimum payments, but interest wonât add up during the promotional period.

If you have an emergency fund, consider whether now is the time to use it.

Also Check: What Was The Unemployment Rate When Obama Was In Office

High Interest Rates Were The Straw That Broke The Camels Back

Ryan felt defeated as anyone with mounting debt would. The interest charges made it feel impossible to get ahead. Even if he got a job, how would he move beyond paying interest on his debt? To effectively tackle debt, its best to pay more than the minimum payment.

His financial challenges began negatively affecting his mental health. Studies show people with debt are three times more likely to have mental health issues like depression, psychotic disorders, and anxiety. In Ryans words,

The debt snowballed with interest charges that left me feeling defeated and depressed. I was absolutely ashamed of the hole I had dug for my family, and I couldnt see a way out. I was nearly resigned to the concept that Id be stuck working my butt off forever in order to pay for the mess I had made.

Option : Qualifying For Unemployment Benefits

Unemployment benefits may seem like theyre automatically provided for someone the second they lose their job. But it is important to realize that you must qualify for unemployment within your state.

There are several things to consider when looking into qualifying for unemployment benefits in order to cover expenses.

One thing to consider is the manner in which you lost your job. If you are unemployed because of company decisions that you are not at fault for, you may be in the running for eligibility. An example of job loss outside of your control is company downsizing. When a company is downsizing, this means they are cutting the cost of, well, everything in the company to support it staying afloat through a period of business and financial hardship.

Downsizing, in turn, means there will be a lack of available work, and employees are likely to be laid off. When this happens, you may be entitled to severance pay. This means you can keep benefits like health insurance for a little longer.

Another thing to consider when evaluating eligibility for unemployment benefits is if you meet specific wage and work requirements.

This means you must determine whether or not you earned an ample amount of wages during a specific time period of work. This time period is referred to as a base period. This time period is judged off when you worked in relation to when your unemployment claim was filed.

Read Also: How To Do My Taxes With Unemployment

What To Say When You Contact A Lender

When contacting your lenders, be prepared to explain:

• Your financial and employment situation
• How much you can afford to pay
• When youre likely to be able to restart regular payments
• Your income, expenses and assets

Be sure to get confirmation of any agreements in writing.

Achieve Financial Control How Much Debt Do You Have

Or speak to a debt consultant

Although unemployment went down slightly last month 13% in May compared to the record-high of 14.4% in April its still at the highest levels since the Great Depression. Experts can only guess at how quickly the economy may recover some expect it to bounce back once the coronavirus threat has passed, while others speculate that we could be in for a long, slow recovery similar to the Depression.

Regardless of how the economy overall is doing, what really matters is your employment situation. If youre one of the more than 40 million Americans who filed unemployment claims since March, you may be concerned about your finances, and especially how to manage credit card debt when you dont have income coming in like you used to.

Here are steps you can take to figure out what to do about your debt while youre unemployed:

Recommended Reading: How To Apply For Unemployment In Ky

Turning To Credit Cards If You Cant Pay Your Bills

The average American family has less than $10,000 in savings. As non-essential businesses have been closed across the country, families have been going through those savings at warp speed. Credit card spending has increased and thats because Americans are paying for basic things like utilities on their credit cards.

Even if youre lucky enough to have some savings in the bank, the uncertainty about when youll have a consistent income stream is enough for you to utilize any remaining credit you may have to keep emergency cash on hand. Its a vicious cycle of robbing yourself to keep yourself paid, and it brings tremendous stress when you think about what youll do if you cant pay your bills.

Ask Questions About The Credit Card Relief Packages They Offer

While your credit card company may offer up one or more options, have a list of questions prepared in advance. You want to make sure youre completely comfortable with the terms before you agree to these options.

Here are key questions to ask:

Note: that the recently passed Coronavirus Aid, Relief, and Economic Security Act places special requirements on companies that report your payment information to credit reporting agencies if they provide payment relief due to the coronavirus pandemic.

• Will I lose the ability to charge anything to my card if I enroll or request relief?

Don’t Miss: How Much Is Unemployment In Colorado