In an ideal world, you could spend your credit card and pay your entire bill in full by the time your next due date is due.
But sometimes, when finances are tight, you can (and should) use your credit card to get things done.
By opting for a credit card with a low interest rate and seeking help when needed, you can minimize the amount of debt you take on during difficult times.
Use your credit card with the lowest interest rate first
It’s not easy to find a credit card with a really low interest rate. Many credit cards offer a 0% APR introductory promotion, but once it ends, the rate jumps up, often to mind blowing levels.
Even if you find this unicorn offer, it can take weeks to receive a credit card in the mail. So this strategy will most likely only work for those with a low interest rate credit card (or one that still has a 0% initial offer that hasn’t expired yet).
However, it may be worth applying for a low interest rate credit card if you expect your cash crunch to last more than a week or two.
Just make sure you can temporarily lower your credit score. You don’t need to get yourself in more financial trouble if your account can’t handle it.
More: Best credit cards 0% per annum
Ask your credit card company for a lower interest rate.
As surprising as it may sound, you can ask your credit card company for help.
Credit card companies have been known to offer lower interest rates and waive fees when their cardholders are in financial distress. Of course, there is no guarantee that your credit card company will honor your request for help. But it’s definitely worth a try.
Just call your credit card customer service line. Start a conversation by providing information about how long you’ve been a customer of the company. Then ask for help. In some cases, it can be as simple as that. But, most likely, you will have to raise your request up the chain of supervisory authorities.
Be flexible when asking for either a lower interest rate or commission exemption. You may be surprised at what a credit card company has to offer you. This is especially true if you are a regular customer and have a track record of making payments on time.
If possible, keep paying on time.
You may not be able to pay off your balance in full each month. But that doesn’t necessarily mean you can’t make timely payments. If at all possible, try to make your minimum monthly payment on time each month.
While meeting the minimum monthly payment will prolong the payment of your credit card debt, at the very least it will help keep your credit relatively intact. This is because your payment history is 35% of your credit score – making this minimum payment critical to the health of your credit score.
Use any rewards you have
If you have any rewards available through your credit card, now is the time to use them.
Many credit cards offer credits or gift cards from popular stores as a reward. While it would be nice to save those points for more value, such as flights or free hotel stays, you should take advantage of the little cushion these rewards can provide in a difficult financial situation.
Personally, I usually let my rewards accumulate for some major purchase. But in an emergency, these reward points can save the day. Take a minute to go to your credit card portal. If you find a stash of glasses, use what you have if absolutely necessary.
Stick to your needs
While it probably goes without saying, you should only use a credit card to cover essential expenses during times of economic hardship. The fewer fees you can put on your card, the easier (and faster) it will be to pay off your debt.
The first reason to stick to the bare necessities is that fewer payments preserve your ability to expand your credit usage as needed. Depending on your credit limit, you can extend this reserve for weeks or months.
In addition to preserving purchasing power, limiting your spending will create a smaller hole to climb out of when the sunny skies return.
Make a plan to get out of debt
Speaking of how to get out of this hole, you should start making a plan to get out of credit card debt now. Without a plan, it can be incredibly easy to slide into a mountain of debt that is simply too much for your finances. But if you tread carefully, you can remember the end goal of paying off that high-interest debt.
Even though you’re relying on your credit card right now, you should consider getting everything back. This could include selling off expensive items in your home, permanently cutting all your expenses, or choosing a more lucrative career.
Here is a step by step guide on how to get rid of debt in one year.
If you can find an alternative to credit cards, you should
Even if you use a 0% APR credit card to cover unexpected expenses, there is no reliable way to eliminate the possibility of you paying high interest debt. Unless, of course, you pay off your balance in full before the end of the 0% introductory period.
However, it is incredibly important to consider all of your other options before using the available credit you have. If you are at the end of your financial rope, these other opportunities may provide the respite you’ve been hoping for.
Ask a family member for help
If you have a family member or friend you can rely on, consider asking them for help. Of course, their own finances may or may not allow them to help you. But asking for help can help you avoid unwanted interest payments.
Consider other loans
Personal loans as well as home secured loan, for example, may offer single-digit interest rates if you have an excellent credit history. In addition, they offer a set repayment term that lets you know exactly when you’re done paying off your debt.
More: Best Personal Loans: Compare Loans for Any Loan
Avoid payday loans
A few loans to avoid include payday loans and auto loans. Both of these loans usually charge triple digit interest rates. In addition, you usually only have two to four weeks before the loan is due.
More: What is a payday loan and why is it a REALLY bad idea to get one?
Think about a side job
While a side job is likely not a panacea for your cash flow problems, the right side job can provide extra cash when you need it most.
The good news is that there are plenty of part time jobs with a low barrier to entry. Actually, here are a few you could dive into today.
Summary
When used responsibly credit card can help you cover unexpected expenses. But relying on it is rarely a good idea. Due to high interest rates and no set repayment schedule, placing a credit card for emergency expenses can hurt you financially.
Explore all other emergency financing options other than a credit card. As a last resort, if you must use a credit card, be sure to use the card with the lowest interest rate, or better yet, pay off the balance in full to avoid paying interest.
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