Using Credit Cards During COVID-19
Since weâre in the middle of a pandemic, weâre all trying to figure out the new normal. Whether youâre working from home, have a houseful of kids to keep busy or find yourself facing financial uncertainty, everyone has at least a little adjusting to do. While youâre taking stock of your life and what you need to adjust, itâs probably a good idea to take a look at your finances and credit card use, too.
Wondering how you should use your credit card? Weâve got some ideas for you on how you can use your credit card in the middle of a global emergency.
How to Use Your Credit Card During a Pandemic
But before we get started, remember to take a hard look at your personal finances before following any financial information. Everyoneâs situation is differentâso what might work for you might not work for someone else, and vice versa.
1. Keep Online Shopping to a Minimum
If youâre working from home, the temptation to online shop can be all too real. But when youâre in the middle of a pandemic, you might need to put your money towards unexpected expenses.
David Lord, General Manager of Credit.com, has some advice on preventing frivolous spending. âTry browsing, putting things in your cart and leaving them for the day,â Lord suggests. âIf you take a look at your cart the next day, youâll most likely find that 90% of the time you wonât remember the things you placed in your cart in the first place.â
If the temptation to online shop is too strong, Lord suggests buying something thatâll keep you occupied for a while, like a puzzle, a paint set or a yoga mat. That way, youâll be too distracted to buy something else.
2. Try to Keep Your Credit in Good Shape
During a global emergency, it feels like everythingâs up in the air. Because of that, itâs important to stay as on top of things as you can and prepare for the worst-case scenario. Having good credit is important in the best of times, but it can be even more so in the worst.
Letâs say you find yourself with a bill that you canât pay on your hands. If you need to take out a loan, youâd probably want a loan with the best interest rates possible. In order to qualify for those types of loans, youâll need a good credit score.
If youâre in a position to do so, try to keep your credit score healthy. Hereâs some quick things you can do today:
- Keep an eye on your credit score and credit report
- Pay your bills on timeâat least the minimum payment
- Keep your credit utilization ratio at 30%
But if you find yourself in a financial situation where you canât keep up with everything, you can prioritize. For example, going above 30% of your credit utilization ratio wonât impact your score as much as missing a payment. Thatâs because credit utilization makes up 30% of your credit score, while your payment history makes up 35% of your score.
3. Utilize Cashback Rewards
Do you have a greatÂ rewards credit card on your hands? Nowâs a great time to use them. While some credit cards might not be handy right now, like travel rewards cards, there are others that could be useful. If your card offers cashback on categories such as groceries, gas and everyday purchases, take advantage. You could use those rewards to help you cover essential purchases.Â
4. Use Your Balance Transfer Credit Cards
If you already have significant debt or if youâve recently taken on new debt, you might want to consider using a balance transfer credit card. A balance transfer credit card allows you to move your debt from one card to your balance transfer card, which typically has a lower promotional interest rate. These promotional interest rates can last from six to 18 months, and sometimes longer.
These are great options if youâre faced with new debt. If youâre struggling to pay the rent, groceries or medical bills, and your stimulus check canât cover it all, you can use your balance transfer credit card. Just make sure to be careful. You still have to pay off your debt, so make sure to do so before the promotional balance transfer offer ends. If you can, try to make regular payments on your card, so youâre not faced with an overwhelming amount of debt when the promotional offer ends.
Be Mindful of Your Situation
Above all else, be mindful of your situation. What urgent bills do you have to pay? Do you have a loved one in the hospital? Have you or your significant other lost their job? Make goals based off of your situation, and use your credit card accordingly.
Go to Guide
If youâre looking for more information on coronavirus and your finances, check out our COVID-19 Financial Resource Guide. We update it frequently, to make the most up-to-date and useful information available to you.
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