How to Keep up With Credit Card Debt After Getting Laid Off

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  • Tech companies like IBM, 3M, and Salesforce have laid off more than 65,000 employees in 2023 alone.
  • If you just got laid off yet still have high credit-card balances, here are three ways to manage your debt.
  • Consider opening a credit card with a 0% introductory interest rate for balance transfers.

Tech companies across the US have laid off more than 60,000 workers in January 2023 alone, and economists are predicting there will be more across industries in the coming year.

To make matters worse, an Experian survey shows that 62% of Americans have one to five credit cards, with average monthly charges of $779.83. The survey also shows that most credit card users are charging everyday expenses to pay for things they can no longer afford due to inflation.

“Hopefully, you get a nice severance package. But still, after getting laid off, the first thing you wanna do is clean house, go through your budget, and remove any extraneous expenses,” says senior wealth advisor and CEO Marianela Collado at Tobias Financial Advisors.

If you have a severance package, Collado recommends budgeting for up to 12 months of unemployment, just in case it takes you longer than expected to find a new job.

Additionally, if you’re dealing with high credit-card balances, here are three ways to manage your debt to help stretch your severance package even more.

1. Reach out to your lenders to negotiate lower monthly payments

Collado suggests calling your credit card, utility, and mortgage companies as soon as possible to try to negotiate lower monthly payments.

“I would call the mortgage company and explain, ‘I’ve been laid off. I don’t want to be late on my payments. Is there something we can work out, maybe lowering the payment for the next six months?'” she says.

“If your account is three months overdue, it’s gonna be harder for them to work with you,” Collado adds. Instead, put yourself in the good graces of your credit card, utility, or mortgage company by reaching out proactively, she says.

2. Consolidate your credit cards into one personal loan

Collado also recommends taking out a personal loan to consolidate your credit card bills.

When you carry a balance from month-to-month, it can be difficult to get out of credit card debt. That’s because of compound interest, often described as “interest on interest.” It’s essentially interest on the principal, plus whatever past interest has been added to the balance.

This can work in your favor if you have, say, a certificate of deposit (CD) that earns compound interest. But it can hurt you if you take on debt, particularly credit card debt, and only making the minimum monthly payments that don’t go far enough to pay down any accrued interest.

When you consolidate your credit cards into one personal loan, the debt stops accruing compound interest, and you’ll have an easier time paying down the debt with one fixed payment instead.

3. Find a credit card with a 0% introductory interest rate for balance transfers

“Another thing to consider, if possible, is moving balances around for 0% interest,” says Collado.

A credit card that offers a 0% introductory APR can help you pay off your debt faster if you’re carrying a credit card balance.

Insider’s Featured Intro APR Credit Cards

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Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

0% intro APR on balance transfers for 18 months and on purchases for 6 months

Regular APR

16.24% – 27.24% Variable

0% intro APR on balance transfers for 21 months (transfers must be completed within 4 months of account opening) and on purchases for 12 months

Regular APR

17.24% – 27.99% Variable

0% intro APR for 18 months from account opening on purchases and qualifying balance transfers (three months intro APR extension with on-time minimum payments during the intro period)

Regular APR

17.24% – 29.24% variable

For example, if you have $2,000 on a credit card with an APR of 18%, your monthly minimum payment will only go toward the interest on the account instead of the $2,000 you originally owe. If you transfer your balance to a new credit card with a 0% introductory interest rate, the monthly payments you make on the card will help you chip away at the $2,000 balance you owe.

Make sure to use this option responsibly, Collado says.

“The goal here should not be to add more debt unnecessarily and spend money that you don’t have,” she says. “This is just a way to extend whatever cash flow or emergency savings you’re living off of while you find a new job or income source.”

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