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How to Effectively Manage your Credit Cards in the Event of Possible Unemployment

Credit Repair

In today’s tough economy most of us have witnessed our family and friends facing unemployment. Unfortunately, an increase in unemployment is a direct result of the crumbling housing market and weakening credit sector.

Now, what happens when unemployment threatens your job?

If you find yourself on the receiving end of a possible lay-off or termination, there are a few things you can do to manage your finances, including your credit cards:

1. Take a good, hard look at your budget and find ways to cut expenses. Use that money to cushion your emergency fund so that you won’t be left without a savings account in the event of unemployment. Although many consumers’ first instinct may be to pay off their credit cards with this extra money, it probably isn’t the best idea. Instead, continue to make the minimum payments on all your cards as to protect your credit score, and put any extra cash into an interest-bearing savings or money market account.
2. If times are particularly tough, and you are finding it hard to even make the minimum payments on your credit cards, call the credit card company and ask about their forbearance policy. Many credit card companies will waive the monthly payment for a few months while you work on finding a job.
3. If you feel as if you might be facing unemployment, think ahead and consider a personal consolidation loan or consider consolidating your credit card bills onto one, low-interest credit card that will be much easier to handle if you lose your job.
4. Always pay your unsecured debt first. Although the last thing you would ever want to do is miss your credit card payments, the harsh reality is that, given the choice between paying your mortgage or your credit card payments, you must keep a roof over your head.
5. Contact an accredited consumer counseling agency. An accredited consumer counseling agency may be able to strike a deal with your creditors and give you a much more manageable monthly payment in the event that you can no longer meet your credit card payments each month.

Starting Over after your Bankruptcy: What you can do to Help Begin Repairing your Credit

Credit Repair

First things first: we all know that bankruptcy can severely damage your credit score. Luckily, however, it doesn’t have to be a life-long sentence!

You can begin rebuilding your credit rating almost immediately after you file for bankruptcy, provided you have recognized your credit mistakes in the past and have learned from them. A good place to start is consumer credit counseling classes. These classes can help you properly manage your monthly finances and budget, and can also teach you ways in which you can responsibly handle your debts and rebuild your credit rating.

Secured Credit Cards

A great first step is to apply for a secured credit card. A secured credit card essentially means that you send the credit card company a certain amount of money that they hold in a separate account. The amount you send generally matches your credit limit. For example, if you have a credit card with a $500 credit limit you would have to send the credit card company $500 to secure the card.

If you pay the bill on time, your $500 remains in your account. If, however, you fail to pay the credit card bill, the credit card company simply takes the money out of your account to settle the debt. The credit card company will then likely cancel your account, so it is well worth your time to remain responsible when dealing with a secured credit card.

It is also important to remember that a secured credit card can affect your credit rating, so always pay your balance in full every month so that you can begin rebuilding your credit rating.

Unsecured Credit Cards

Another option may be a credit card with a low credit limit. Many people can successfully get credit cards while still in bankruptcy, but it is important to remember that these cards often come with high fees and equally high interest rates. In other words, pay off your balance in full each month to avoid paying astronomical interest rates and to begin building a positive credit history.

A bankruptcy is certainly going to blemish your credit score, but you can begin working toward a brighter credit future if you act now!