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How to Pay off Credit Card Debt While You are Unemployed

Epic Loans Editorial Team

How to Pay off Credit Card Debt While You are Unemployed

It is hard when you lose a job, especially if you are responsible for your family’s finances and must manage debt. If you carry a credit card debt, skipping or missing the payments can lead to a bad credit score and potentially land you in the trouble of dealing with debt collectors.

A survey of over 31,000 credit card users suggests that 51% of them do not pay their credit card debt on time and accumulate interest. The number of those rolling over their payments to the next months has gone up to 50% between 2018 and 2022.

Dealing with unemployment and credit card debt can be daunting. But rather than letting your credit score plummet, you need a strategy to deal with credit card debt till you can find a new job. So, how do you pay off credit card debt without a job?

Get in Touch with Your Credit Card Company

You can contact your credit card company, which works with several people who are unable to pay their bills and may have options for you.

The credit card company may reduce your interest rate or the minimum payment or waive the accrued late fee (if any). In exceptional situations, you may also request a temporary hiatus from paying the bill.

If you have a long history of on-time payments, your credit card company could act as an ally and help you sail through the tough times. Check if you have a payment protection plan, which – for a small monthly fee – lets you pause the payments temporarily.

Read More: How to Negotiate Credit Card Debt

How to Pay off Credit Card Debt While You are Unemployed

Start Preparing for a Monthly Budget

If you lose your job, the Customer Financial Protection Bureau suggests that you review your expenses and cut down wherever possible. Review your monthly expenses and budget for essential needs. Delay the luxuries to meet the monthly obligations while you search for a new job.

Here are some pointers to help you prepare a monthly budget and pay off your credit card while unemployed:

  • List all basic expenses such as house rent, utility bills, groceries, health insurance, car payments, phone and cable, and personal care.
  • Thoroughly check all existing sources of income, including that of your spouse, passive income from investments, or unemployment benefits.
  • Allocate a percentage of this income to necessities and paying off debt. Use the 50/30/20 rule where 50% is for necessities, 30% for wants, and 20% for paying the debt.
  • Identify areas where you can cut expenses, such as dining out, watching movies, or online subscriptions.
  • Track the monthly spending and optimize it to your needs and income.

Read More: How to Pay off Credit Card Debt

Avoid Adding More Payments Through Credit Cards

Investment planners suggest that your emergency savings should be worth at least six months of expense. For example, if your monthly expense is $3k, your emergency fund should be $18k.

In the absence of an emergency corpus, you may be tempted to use the credit card for daily expenses. Avoid using your credit cards or the 401(k) or retirement account to pay for a credit card.

If you have no savings, are unemployed, and cannot pay credit card dues, consider taking a personal loan, which will be at a lower interest rate than a credit card. Borrow only as much as you need for the next few months so that this does not add to your financial woes.

Check Out Government Assistance Programs

If you have lost a job, you may be eligible for unemployment insurance and other government benefits, depending on the state you live in. Check with the state agency to know the benefits you qualify for and ways to apply.

Some of the unemployment benefits to consider are –

  • Food assistance – Check if you qualify for school meal programs for children, Supplemental Nutrition Assistance Programs, or the Special Supplemental Nutrition Program for Women, Infants, and Children.
  • Medicaid or COBRA – If you are in the low-income band, you may qualify for Medicaid insurance benefits. Check the Consolidated Omnibus Budget Reconciliation Act (COBRA) if you want to continue the health insurance from your previous employer for some time.
  • Housing and utilities benefits – The US government has programs for emergency housing assistance and utility bills for basic well-being.

Once you get the government benefits, continue to use the monthly 50/30/20 budgeting model to keep expenses and credit card debt under control.

Keep Paying the Minimum Amounts to Your Credit Card Debt

You need a healthy credit score to get any loans in the future. Even if you have lost a job, consider making regular minimum payments to keep your credit score strong. Consider the minimum loan and credit card payments as essential expenses alongside rent, food, and utilities.

Read More: Does Credit Card Consolidation Hurt your Credit

Work with a Reputed Non-Profit Credit Counselor

If you are struggling to pay credit cards while unemployed, working with credit counseling agencies can help. Credit counseling agencies are non-profit organizations that help you reduce or eliminate debt. They offer a mix of free and paid services and work on your behalf to negotiate a plan with the creditor.

If you have multiple debt sources, consider a credit card debt consolidation loan that comes with a lower interest rate and is easy to track. Credit counselors can also help you with budgeting to improve your overall financial situation.

It is important to find a credit counselor you can trust – such as those affiliated with the National Foundation for Credit Counseling (NFCC). Most non-profit credit counselors are available through credit unions, universities, US Cooperative Extension Service Branches, and military personal financial managers.

Avoid working with credit counselors who demand upfront payment under false promises that they will help waive off your debt.


If you are struggling to manage unemployment and credit card debt, you are not alone. Banks and credit card agencies help customers in distress regularly. Rather than stressing about the situation, work with your credit card company and credit counselors while seeking government assistance to manage your finances effectively.

Epic Loans can help you manage credit card debt while unemployed with debt consolidation or personal loans. Learn more about debt consolidation and personal loans at Epic Loans.

Frequently Asked Questions

How do you pay credit card debt when unemployed?

You can use one or more of these steps to strategize paying off credit card debt during unemployment –

  1. Make a conservative monthly budget.
  2. Ask for options from your credit card company.
  3. Try to get government unemployment benefits.
  4. Pay the minimum credit card debt.
  5. Take help from a non-profit credit counselor.
Can you be unemployed and have a credit card?

It is challenging, but if you have other sources of income or a good bank balance, you can get a credit card even when you are unemployed.

Do credit card companies know if you are unemployed?

Credit card companies need to be informed of the borrower’s inability to pay. They will come to know only if you reveal to them or miss multiple payments, after which they may ask for a reason.

Should I use a credit card while I am unemployed?

It is best to stop using the credit card while you are unemployed and budget for essential expenses only – such as rent, utility bills, food, and groceries. Using a credit card while unemployed can quickly pile up the debt.