How to pay off credit card debt when you’re unemployed

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Paying off credit card debt when you’re unemployed can be difficult, but it’s not impossible. Here are some strategies you can use. (Shutterstock)

Unemployment can lead to serious financial hardship, especially if you have unpaid credit card debt. With this type of high-interest debt, if you can’t make more than the minimum payment, your balance will continue to grow and can quickly become unmanageable.

And if you can’t make your credit card payments, it will hurt your credit score. Getting rid of your credit card debt while you’re unemployed can be difficult, but it’s possible. And it will free up money that you can use elsewhere.

If you are looking for a personal loan while you are unemployed, Credible allows you to view your prequalified personal loan rates from various lenders, all in one place.

Should You Pay Off Your Credit Cards While Unemployed?

It can be difficult to manage your bills when you are unemployed and you may need to prioritize certain payments over others. For example, you can’t let your rent or mortgage payments slip and have to keep paying utilities.

And you should continue to make at least the minimum payments on your credit cards. If you stop making payments altogether, it can hurt your credit score and affect your financial situation for years to come.

But try to make more than the minimum payments if you can. Credit cards come with high interest rates. Therefore, only making minimum payments means that your debt will grow faster.

How to Manage Credit Card Debt When You’re Unemployed

Here are some ways to manage your credit card debt when you’re unemployed:

  • Talk to your credit card company. Contact your credit card issuer to see if this will work for you, especially if you’re having trouble making minimum payments. They may be willing to defer payments or temporarily reduce your interest rates, especially if you have a positive payment history.
  • Unemployment record. If you were laid off from your job, you might be able to file for unemployment. These benefits usually pay a percentage of your previous salary, although the exact amount depends on where you live. Visit the Department of Labor website to search for unemployment benefits in your state.
  • Free up money. You can also look for ways to minimize other budget items so you can spend more money on your credit card debt. For example, you can cancel subscriptions you no longer use and put that money on your credit cards instead.
  • Look for a temporary income. Try to find ways to bring in extra income that you can allocate to your credit cards. For example, maybe you could work a part-time job or drive for a ride-sharing company while you look for a more permanent job.

7 personal lenders with little to no income requirements

If you are receiving unemployment benefits, you can still qualify for a personal loan. More and more lenders are willing to consider factors other than just your income, and some work with low-income borrowers. But keep in mind that some lenders may ask you to demonstrate your ability to repay the loan.

These seven credible partner lenders have flexible income requirements for a personal loan:

best egg

  • Minimum income: Verifiable income must support repayment capacity
  • Loan amounts: $2,000 to $50,000
  • Repayment Terms : 2 to 5 years

LibertyPlus

  • Minimum income: No income requirement
  • Loan amounts: $10,000 to $50,000
  • Repayment Terms : 2 to 5 years

happy money

  • Minimum income: No income requirement
  • Loan amounts: $5,000 to $40,000
  • Repayment Terms : 2 to 5 years

loan club

  • Minimum income: Verifiable income must support repayment capacity
  • Loan amounts: $1,000 to $40,000
  • Repayment Terms : 3 or 5 years

Prosper

  • Minimum income: A form of annual income
  • Loan amounts: $2,000 to $50,000
  • Repayment Terms : 2 to 5 years

Reach the Financial

  • Minimum income: $1,000 per month
  • Loan amounts: $3,500 to $40,000
  • Repayment Terms : 2 to 5 years

Reached

  • Minimum income: $12,000
  • Loan amounts: $1,000 to $50,000
  • Repayment Terms : 3 to 5 years

Visit Credible for compare personal loan rates from various lenders, without affecting your credit score.

Pay off credit card debt with a personal loan

If your credit card company cannot help you, pay your card balances with a Personal loan can make sense. Replacing your credit card debt with a personal loan has many benefits, including:

  • Lower interest rates — Personal loans come with much lower interest rates than credit cards. The average credit card interest rate in May 2022 was 16.65%, according to data from the Federal Reserve. In comparison, 24-month personal loans over the same period had an average interest rate of 8.73%, so they tend to be much more affordable.
  • Fixed monthly payments — Personal loans are a type of installment loan, so you will make the same payment each month over a set period of time. This can make it easier to plan your monthly payments, but you won’t be able to pay less if your income is tight one month.
  • Flexible income and credit requirements — Some lenders will allow you to take out a personal loan even if you have low income or bad credit. However, there are downsides to this strategy, as bad credit personal loans tend to come with higher interest rates, higher fees, and less favorable repayment terms.

You will need to meet the lender’s income, credit score, and other requirements to qualify for a personal loan. The exact requirements will vary depending on your lender.

If a personal loan to pay off credit card debt is right for you, Credible makes it quick and easy. compare personal loan rates to find the one that best suits your needs.

Kayleen C. Rice