If recent economic events showed us anything, it’s that you can never be certain about when the next crisis will take place. Whether you’ve recently lost your job or are just trying to navigate the higher cost of living, credit cards seem like a great solution when financial burdens are high, right? Well, there are somethings you should know about them.
First of all, remember that even when your credit card can be used to pay your way of life, in times of crisis you should think as well to reduce its cost, and whatever you spend on it, it will be you who will eventually pay for it.
Effectively managing your credit card in times of crisis is a delicate situation to maintain positive credit while still keeping up with growing bills, making it important to consider these top tips.
Understand Your Situation
First, you want to understand your situation. This can be done by looking at your current income streams compared to your payment obligations. What are the payments you have each month? These could be housing payments, car payments, and food expenses. Make a list and compare those to the income you have coming in to determine your reliance on credit cards.
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Make The Minimum Payments
Next, as you begin to put expenses on your credit card, be sure to pay at least twice the minimum monthly payment, it may seem like a stretch in times of crises, but just as inflation is on the rises, the interests on your credit cards are as well growing, and let’s be honest, your financial troubles may not really end by next month, so try to minimize your spending on your credit card and increase the payments to stop paying for interests.
Utilize Reward Points
Most credit cards come with some type of reward system. This could be cashback, discounts on gift cards, or points to use at qualifying places. Understand the cash back system your credit cards have to take full advantage of them. Maybe you have the ability to receive $10 off at a grocery store or can use the points to directly pay down your balance. Whatever the case, leverage these discounts to save money in times of crisis.
Negotiate Lower Interest Rates
Credit card companies make their money off the interest you pay. In exchange for being a loyal or long-term customer, credit card companies are more likely to work with you to keep the line of credit open. This gives you a bargaining tool to reduce your interest rate, with some companies even foregoing interest for a certain period. Reach out to your credit card companies, explain your situation, and ask for an interim interest rate that is lower than your current one. This is crucial to keeping your debt burden low in times of crisis.
In exchange for being a loyal or long-term customer, credit card companies are more likely to work with you to keep the line of credit open.
Summary
Navigating how to manage your credit card in times of crisis should be a top priority if you plan on using your credit cards as a financial tool. You don’t want to put your credit at risk when you fall into financial hardships. These are great tips for effectively managing your card; however, some individuals see greater benefits when working with a professional on tailored solutions.
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