6 ways to manage credit card debt while unemployed (2024)

As more Americans struggle to make ends meet in today's unusual economic climate, credit card delinquencies are on the rise and maxed-out credit card accounts are a relatively common issue — especially for members of certain generations. And, that uptick in card delinquencies can be attributed, at least in part, to the elevated interest rate environment, which has caused credit card rates to hover above 21% on average.

Further compounding the situation are factors like persistently high inflation, which has pushed up the cost of everything from gas and groceries to housing and put immense pressure on many household budgets. As the cost of living continues to rise, many cardholders find themselves struggling to make ends meet, leaving little room for credit card payments.

But when an issue like unemployment enters the equation, the challenges of managing credit card debt can become even more daunting. Without a steady income stream, cardholders may find themselves grappling with difficult choices and potentially falling behind on their financial obligations. If you're one of them, there may be strategies you can use to better handle your credit card debt while unemployed. Below, we'll break down what you should know.

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6 ways to manage credit card debt while unemployed

If you're currently unemployed and need help with your credit card debt, the following options may be worth considering.

Inquire about credit card hardship programs

Before you consider other routes, you may want to make some calls to your credit card issuers to find out what options they have for cardholders who are facing financial hardships. For example, many credit card issuers will offer credit card hardship programs that are designed to provide temporary relief to cardholders who are temporarily dealing with job losses, serious medical issues or other types of financial difficulties.

The benefit of utilizing these programs is that they may result in reduced interest rates, waived fees or even deferred payments for a specified period. And, you typically don't have to pay anything extra to enroll in them. You'll simply need to openly communicate with your credit card companies, explain your financial situation and provide documentation (in certain cases) to get some relief.

Find out more about how the right debt relief program could help you today.

Enroll in a debt consolidation program

Another option is to enroll in a debt consolidation program to roll all of your credit card debts into one monthly payment at a lower rate. Debt relief companies offer these types of programs, and when you enroll in one, you typically borrow a lump sum from one of the company's partner lenders. That money is used to pay off your credit card balances, and you make monthly payments to the debt relief company to repay the loan.

While any type of monthly payment obligation can be stressful when you're unemployed, taking advantage of the lower interest rates these loan programs offer, and, in turn, the lower monthly payments, could mean the difference between affording your monthly debt obligations or not. After all, a reduction of even $50 per month in interest charges could make it a lot easier to manage your debt payments on a tighter budget.

Utilize a debt management plan

You may also want to consider the benefits a debt management program can offer you if you're in between jobs. With this type of program, the goal is to negotiate with your creditors to negotiate lower interest rates and waive certain fees, providing you some relief from the high interest charges or extra costs.

In turn, a debt management program can help you regain control of your finances and pay off debt more efficiently. And, in most cases, they'll work to try and fit your new monthly payments into your budget, which can make it easier to stay on top of your credit card payment obligations while your income is lower than normal.

Weigh the benefits of a debt settlement program

Debt relief companies also typically offer debt settlement, or debt forgiveness, programs to those who are facing financial hardships. The goal of these programs is to negotiate with your creditors to reduce the total balance of your credit card debt. If successful, the credit card companies will "forgive" a portion of what you owe in total.

When you enroll in a debt settlement program, you'll make payments to the debt relief company based on what you can afford to pay each month. That money is held in a special account until enough has accrued to begin the negotiations. If negotiations are successful, a lump-sum payment will be made from the money in that account to settle the debt.

This option can be more risky than the others outlined above and can potentially damage your credit score, but it can also result in more relief than some of your other choices. In turn, the benefits and possible downsides should be considered thoroughly before enrolling.

Seek assistance from nonprofit organizations

There are also nonprofit organizations that offer financial counseling and guidance for those struggling with debt, and utilizing what these organizations offer can be a smart way to better manage your debt obligations during periods of unemployment. After all, these resources can provide valuable insights and strategies for navigating credit card debt based on your unique circ*mstances, so don't discount the help and guidance that a nonprofit organization can offer you in this situation.

The bottom line

It's important to note that while these strategies can provide relief from the weight of high credit card payments during periods of unemployment, they may also have implications for your credit score and overall financial health. That's why it's important to fully weigh each option and determine what makes the most sense for your circ*mstances.