Getty Images
Losing your job is stressful enough without the added burden of credit card debt — but right now, many Americans are juggling both challenges simultaneously. The total amount of credit card debt is growing nationwide, and the average cardholder now owes about $8,000 on their credit cards. A large percentage of cardholders are also maxed out and payment delinquencies are climbing. When you combine those issues with the stress caused by limited unemployment income, the financial pressure can feel insurmountable.
After all, if you’re living on unemployment benefits or your emergency savings, even the minimum credit card payments can strain your budget. And, with the average credit card interest rate at nearly 23%, any balances that carry over can grow substantially, even if you’re not making new purchases. It also takes the average job-seeker over five months to secure a new role, according to the U.S. Bureau of Labor Statistics. That compounding debt can be especially concerning if your job search takes longer than expected.
Being unemployed doesn’t mean you’re out of options for managing your credit card debt, though. Many creditors have programs specifically designed to help people experiencing temporary financial hardship — and there are other options worth considering, too. By utilizing these strategies, you may be able to prevent your debt from spiraling while you focus on finding new employment.
Speak to a debt relief expert about your options today.
5 ways to lower your credit card debt while unemployed
The following strategies could help you reduce your credit card debt as you look for new employment:
A credit card hardship program
Many credit card companies offer hardship programs specifically designed for cardholders facing financial difficulties, including unemployment. These programs can provide temporary relief by reducing interest rates, waiving fees, or even allowing you to skip payments for a set period. While these programs won’t eliminate your debt, they can reduce the financial burden in the short term, which buys you time to stabilize your income. By enrolling in a hardship program, you’ll also typically avoid the credit damage that comes with other debt relief options.
Find out how the right debt relief program could benefit you now.
A debt management program
Enrolling in a debt management program is another potentially effective option to consider if you want to lower your credit card debt when you’re unemployed. Offered by credit counseling agencies, these programs consolidate your credit card payments into a single monthly one. The credit counselor also works with your creditors to negotiate lower interest rates or waive fees, making it easier to pay down your debt. While you’ll still need to make regular payments on what you owe, these programs can make the process more manageable while ensuring that you’re getting advice tailored to your financial situation.
Debt settlement via a debt relief program
Debt settlement (also known as debt forgiveness) is another potential option to consider if you’re facing overwhelming credit card debt without a steady income. This process involves negotiating with your creditors to settle your debt for less than the full amount owed. With this route, your total balance could be reduced by as much as 30% to 50% or more, providing serious (and necessary) relief. While you can take this approach on your own, it is often beneficial to have a debt relief company act as an intermediary on your behalf. However, it’s important to keep in mind that this approach can impact your credit score and may involve fees from the debt relief company.
A balance transfer to a new card
If you still have good credit despite your unemployment, transferring your balance to a card with a 0% introductory APR period can provide some much-needed breathing room by eliminating interest from the equation. Balance transfer cards generally offer up to 21 months without interest, though you’ll typically pay a balance transfer fee of 3% to 5% in return. Note, though, that this strategy works best if you’re early in your job search and are confident about your employment prospects, as you’ll need to plan for higher payments when the promotional period ends and the regular APR kicks in.
The bottom line
Lowering credit card debt while unemployed can be challenging — but it’s far from impossible. By taking proactive steps, such as exploring debt settlement, hardship programs or debt management plans, you can create a path toward financial stability. And remember that unemployment is a temporary setback, not a permanent state. So stay persistent, explore your options and seek support when needed. That way, you can reduce your debt and build a stable financial foundation that will benefit you now and long after this setback is over.