With the novel COVID-19 rendering over 20 million Americans jobless, many people are getting a hard time getting by and paying their bills. But, did you know if you use your credit cards strategically they can help you navigate this rough financial patch during the recession?
With all the bad reputation surrounding the credits cards, you may be prompted not to use them and this should not be the case.
It is in this regard; we will take an in-depth dive into 7 smart ways to use your credit cards in a recession.
1. Comprehend Changes to Rewards and Benefits
Credits card benefits and rewards are prone to changes. That’s why you should contact your credit company to know whether there are changes in your rewards and benefits. In the era of novel Coronavirus pandemic credit card companies know that many people are in financial distress and have increased their rewards and benefits.
Let’s examine changes in some of the credit cards:
- Citibank– The $250 exclusive for travel-related purchases that came with the Citi Prestige Card can now be used for purchasing food and grocery until the end of the year.
- American Express– Until the end of 2020, the package provided by AmEx Platinum Card for streaming and wireless phone services like Netflix allows you to collect up to $320 cashback.
- Chase- Chase Sapphire Preferred has increased their benefits and rewards up to 25 percent which can be used for home improvements, dining, and grocery. This offer extends up to 30th September 2020.
2. If your Financially Distressed Don’t Pay Off Cards
During normal times paying credit balances every month was a norm. but with the new normal, most credit card companies are allowing their clients to hold on to debt without imposing diabolical interests and penalties. Therefore, if you are financially distressed, you may hold on to the debt until you are stable.
3. Avoid Cancelling your Cards
Did you know canceling the credit cards that you’re using to avoid annual payments can negatively affect your credit score? It is always a smart move to keep the card aside when not using it instead of canceling.
4. Adjust or Turn Off Autopay
Many people use autopay feature to avoid late payments. But, now credit card holders have lowered the rates of checking an account. That’s why you should consider making a few tweaks to your autopay to cover minimum payments. You may also decide to switch it off.
Always remember it is good to make adjustments that avoid overdraft fees.
5. Focus on Cash Back Cards
Most people in the neo-pandemic era are focusing on maximizing their cash flow. That’s why you should consider shifting to cashback cards. The rewards redeemed through statement credit on these cards can help you go a long way in purchasing groceries and gas.
6. Control Credit Card Spending
The spending habits you had during the pre-COVID-19 era must go. while credit cards are giving amazing rewards, they won’t solve all your financial problems. Remember, desperate times call for desperate measures.
7. Examine the Installment Loan program
You may find some credit card integrate installment loan feature. These installments allow the cardholder to pay for some purchases in fixed monthly payments under the condition they get fixed interest rates. This will help you to transfer your card loan easily into a personal loan with higher predictability.
If your credit card loan is weighing heavily on you and you wish to establish a strong financial position it is prudent to consider the debt relief program.
For more information on credit cards, contact us.