Article Bookmarked
Bookmark Removed

Tips for Repaying Credit Card Debt After a Long Layoff


Jul. 31, 2020 Money Management International

Here are some tips for getting your credit card balance back to zero after a long layoff: 

STRIKE A BALANCE

In a perfect world, you would be able to pour all your efforts into aggressively repaying your debts (new and old). The reality is that you’ll need to pay off credit card debt while juggling other needs — covering your rent, putting food on the table, restoring your emergency fund, etc. — and that takes a bit of awareness. 

To help you juggle your other financial priorities while paying off your credit card balance, jot down all your money goals. Then order them in order of urgency or importance. Last, figure out exactly how much you can reasonably put toward each financial priority. 

This is the time to get granular. Get specific and assign an exact dollar amount to each of your money goals. Next, figure out a target date as to when you’d like to hit each financial goal. 

LIVE LEAN 

You’ll probably have a hard time ramping up on your credit card payments if you’re also undergoing lifestyle inflation. If you’re starting to rake in some money, instead of going back to your old ways of spending, rework your budget. 

Figure out how much you’ll need to reasonably get by. Go through your list of expenses, and see where you can cut back. Easy wins include nixing or lowering the cost of recurring costs, such as memberships and subscriptions. Let’s say you can cut back on a streaming subscription service that costs $12 a month. That’s $144 a year back in your wallet. 

Big wins include cutting down on the three most significant categories — housing, transportation, and food. If you can slash monthly grocery spending by $50, you’ll have saved $600 a year. Or if you switch car insurance carriers, and save an average of $25 a month on your policy, that will earn you $300 a year. 

FIND WAYS TO MAKE MORE MONEY

While unemployment is at a record high, there are ways you can make a bit of extra scratch. For instance, sell some unwanted stuff. Grow herbs and veggies in your garden, and offer contactless pickup. 

Or you could see what kind of side hustles might suit you. Don’t feel comfortable doing frontline work? You could take up a work-from-home gig, such as being an online tutor, virtual assistant, or work in computer support. If you’re qualified, you could also potentially do in-home bike repairs and general lawn maintenance. Handy with a needle and thread? Set up an Etsy shop and sell customized face masks.

It’s not easy, and finding the time is a real challenge, but for a lot of people the fastest path to debt repayment and a balanced budget is more income. The key is finding ways to leverage your skills (and resources) to meet a consumer need. 

LOOK FOR CREDIT CARD RELIEF PROGRAMS 

A handful of credit card networks — Chase, Citi, Capital One, Apple, Discover, American Express, and Bank of America, to name a few — have been offering economic relief to cardholders who have been impacted by the coronavirus. Depending on your situation, you might be able to have late fees waived, have your payments paused temporarily, or your monthly payments lowered.

It typically depends on your situation. Reach out to your credit card company to see if you can request financial assistance. If you plan on giving the card issuer a ring, anticipate longer than usual wait times. 

KEEP WATCH ON YOUR CREDIT 

Of course, you’ll want to maintain the best practices to minimize damage to your credit score. While paying off debt, be sure to continue making minimum, on-time payments (presuming you can afford them). Plus, you’ll want to keep watch to ensure that your credit usage remains low. Otherwise, your credit score might take a hit. 

There are plenty of ways to check your credit score these days, including some popular money management apps and directly through select credit card issuers. Don’t just pay attention to the score, however. Be sure to review your actual credit reports often. You can access reports from the three major credit reporting bureaus through AnnualCreditReport.com. 

CONSIDER A DEBT REPAYMENT PLAN 

If you’re drowning in your debt, consider a debt repayment plan (DMP). Under a DMP,  you make a single payment for all your credit card debt. While it’s not guaranteed, for most consumers a DMP can lower your interest rates, waive late fees, or lower your monthly payments. The downside of a DMP is that you’ll likely have to close your credit cards. 

Paying off credit cards, while challenging, is certainly doable. The more you know and the greater vigilance you have around your situation, the better. In time, you’ll get that balance down. 

Read More on Money Management International

Gene Upshaw Player Assistance Trust Fund

Apply Today

All Resources

Tell Me More

Do You Need an LLC to Start a Business?

What's the right way to start your business?

Read More

How to Stay Safe When Shopping Online

Tips to keep your data secure.

Read More

6 Ways Being Self-Employed Can Impact Your Credit

And What to Do About It

Read More

Best Debt Repayment Apps

You, like many, might be taking on more debt this year. Don't stress. Have a plan.

Read More

Be a Better Leader, Have a Richer Life

Be real, be innovative and most importantly, be yourself.

Read More

The Pandemic Changes Your Brain Even if You Don't Have It

COVID-19 likely has altered our brains, but we can reverse it.

Read More

How Growing Food Can Change Your Life

According to Gardener Ron Finley

Read More

Will There Be a Second Stimulus Check?

Despite support from across parties and the public, odds are getting slimmer it will hit in 2020.

Read More