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 challenging, but it’s not impossible. Here are some strategies you can use. (Shutterstock)

Unemployment can lead to serious financial hardship, especially if you have outstanding 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 unemployed can be challenging, but it is possible. And doing this will free up money that you can use elsewhere.

If you’re looking for a personal loan while you’re unemployed, Credible makes it easy view your prequalified personal loan rates from multiple lenders, all in one place.

Should You Pay Off Credit Cards While Unemployed?

It can be difficult to manage your bills when you’re unemployed, and you may need to prioritize certain payments over others. For example, you cannot let your rent or mortgage payments go down and you must continue to pay your 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.

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

How to handle credit card debt when you’re unemployed

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

  • Talk to your credit card company. Contact your credit card issuer to see if it will work for you, especially if you’re having trouble making the minimum payments. You may be willing to defer payments or lower your interest rates temporarily, especially if you have a positive payment history.
  • Unemployment file. If you were laid off from your job, you may be able to apply for unemployment. These benefits generally pay a percentage of your previous wages, although the exact amount will depend on where you live. Visit the Department of Labor website to seek unemployment benefits in your state.
  • Release money. You can also look for ways to minimize other budget items to put more money toward your credit card debt. For example, you could cancel subscriptions you no longer use and put that money toward your credit cards instead.
  • Look for temporary income. Try to find ways to earn some extra income that you can put toward your credit cards. For example, maybe you could take a part-time job or drive for a ride-sharing company while you look for a more permanent job.
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7 Personal Loan Lenders With No or Low Income Requirements

If you are receiving unemployment benefits, you may still qualify for a personal loan. More lenders are willing to consider factors beyond your income, and some work with low-income borrowers. But keep in mind that some lenders may require you to prove your ability to repay the loan.

These seven Credible Lending Partners have flexible income requirements for a personal loan:

best egg

  • Minimum income: Verifiable income must support ability to pay
  • Loan amounts: $2,000 to $50,000
  • Payment conditions: 2 to 5 years

Freedom Plus

  • Minimum income: No income requirements
  • Loan amounts: $10,000 to $50,000
  • Payment conditions: 2 to 5 years

happy money

  • Minimum income: No income requirements
  • Loan amounts: $5,000 to $40,000
  • Payment conditions: 2 to 5 years

LendingClub

  • Minimum income: Verifiable income must support ability to pay
  • Loan amounts: $1,000 to $40,000
  • Payment conditions: 3 or 5 years

Thrive

  • Minimum income: Some form of annual income
  • Loan amounts: $2,000 to $50,000
  • Payment conditions: 2 to 5 years

financial scope

  • Minimum income: $1,000 monthly
  • Loan amounts: $3,500 to $40,000
  • Payment conditions: 2 to 5 years

Upstart

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

credible visit for compare personal loan rates from multiple lenders, without affecting your credit score.

Pay off credit card debt with a personal loan

If your credit card company can’t help you, pay off your card balances with a personal loan can make sense. Replacing your credit card debt with a personal loan has many advantages, including:

  • Lower interest rates — Personal loans come with much lower interest rates than credit cards. The average interest rate on credit cards as of May 2022 was 16.65%, according to data from the Federal Reserve. By comparison, 24-month personal loans during that 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 for a fixed period of time. This can make it easier to plan your monthly payments, but you won’t have the option to pay less if your income is adjusted one month.
  • Flexible income and credit requirements — Some lenders will allow you to get a personal loan even if you have low income or poor credit. However, there are downsides to this strategy, as bad credit personal loans tend to have higher interest rates, more fees, and less favorable repayment terms.
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You’ll 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 allows you to quickly and easily compare personal loan rates to find the one that best suits your needs.

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