It goes without saying that the unemployed are at a distinct disadvantage when it comes to credit cards. Not only is a card difficult to manage without sufficient income but with tightened restrictions by lenders, it’s nearly impossible to be approved for one. Young people or those who are finishing their college education are also at a disadvantage and vulnerable to the risks that can come with using credit, if they’re not careful when first entering the workforce or moving into the business world.
Statistics for the underemployed are hard to pin down because of the difficulty of developing an objective set of criteria that would provide a clear definition. But the Bureau of Labor Statistics estimates nearly 9.3 million Americans are working part-time and dealing with tough economic conditions. And for college graduates a recent analysis of government data reveals further evidence of the proliferation of the underemployed from their ranks. College graduates with bachelor degrees are finding it hard in today’s tough job market to find employment that not only matches their educational skills but are being forced to make do with lower-wage jobs.
For the underemployed and people who have are being given fewer hours of work and having their pay cut and post-graduates with hopes of repaying their student loans, the only way to survive in a weak labor market is by keeping debt to a minimum and learning to live on less. In addition, the hope of every American to put away a little for a rainy day is diminished for the under or unemployed.
But no matter how secure a job may appear, there are plenty of examples of seemingly solvent, successful businesses that unexpectedly closed their doors, leaving millions of people without a job. No one is irreplaceable; everyone is vulnerable to a poor economy.
Living with no debt would be the ideal situation for every American. But by acknowledging your vulnerability to touch times, keeping your financial house in order will be more important. If you’re ever forced to live on unemployment benefits it will be a lot easier when you only have to pay for essentials and not for past purchases. This is why keeping credit card debt to a minimum is important. If your current situation includes a large amount of unpaid debt, it’s time to buckle down and make it your top priority to begin paying it off.
Making the minimum payment every month on every credit account is essential to maintaining a respectable credit score. While your mortgage/rent and auto loan need to be at the top of your payment list, special attention should be made to credit cards. There are several strategies to help you get them under control, while still being able to take advantage of the benefits that come from being a credit cardholder.
1. Transfer a high interest rate balance to a low or zero interest card to save hundreds of dollars in interest. The best strategy to making the most of a transfer is to find a zero APR credit card with the longest introductory period to give you time to pay off more of the principal while paying less on interest. Credit card companies have been offering generous zero percent cards for up to 21 months. Look for one that offers the low or zero interest rate on both purchases and transfers.
2. Give serious consideration to making contact with the credit card company. This is one suggestion that will need to be examined closely before putting it into action. If you’re not in immediate danger of missing a payment, it may be better to keep your concerns to yourself; your credit card company may not look too kindly on any suggestion that you’re in trouble and react by lowering your credit limit. But, on the other hand, if you can see trouble looming on the horizon, being proactive by admitting your problem to your credit card issuer may remove any immediate threat; credit card companies do not want their customers to default on their obligations and are sometimes willing to suspend or reduce your payments until you get back on your feet.
3. Stop using your credit cards. As trite as this suggestion may be, it is one that requires a great deal of discipline for many people who have come to use credit cards as they would cash. It doesn’t matter what your economic situations is, most Americans have gotten into the habit of pulling out plastic for nearly every purchase. Make the commitment today to use cash. If you find yourself tempted, store your cards in a safe place and avoid carrying them in your wallet or purse. Set them aside to be used only for emergencies.
No one knows your personal finances or lifestyle like you do; therefore, any advice you may be given is only as good as your willingness to put it into action. Write down your financial details including income and all expenses to get a clearer picture of where you may be vulnerable. Be honest with what you discover.
If your income isn’t adequate to meet your living expenses, don’t panic. There are worse things in life than being late or even missing a payment or two. And even in the worst case scenario, you can recover over time when employment opportunities and the economy are better.
About The Author: Noreen Ruth writes for ASAP credit new blog and several popular finance websites. She is interested in educating consumers about using credit responsibly and about legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content to educate consumers on credit card offers, debt relief services, loans and other finance related topics.