Using Your Credit Cards to Navigate Through COVID-19
Updated: Jul 27, 2020
Credit is a great tool. That's why it's so popular. Credit allows businesses and people to take risks that allow them to reach their potential. It makes it possible to close gaps that they otherwise might not be able to close. Using this tool wisely is a great way to invest in yourself and open new doors.
During the COVID-19 pandemic, millions of people have seen big changes to their cash flow. Whether they're on furlough, collecting unemployment or taking on gig work to help make ends meet, their financial picture has changed drastically. Using cards wisely is a great way to weather this crisis. There are three ways cards can help people improve their position during this pandemic. 1. Close The Gap The pandemic has forced thousands of people to change jobs or apply for unemployment. For some of them, this means changes to payday and changes to the amount of their earnings. Using cards to bridge the gap while making that transition can be an effective strategy. Cards can be a good fix to a temporary cash flow problem. It's important to try and keep balances low, however, because credit card debt can mount quickly.
2. Hang Onto Your Cash Cards are a great tool when holding onto cash for other planned purchases. Hanging onto cash can be a prudent move for many reasons. For example, most people pay their rent or mortgage from a checking account. It can be a wise move to preserve that money for that purpose and use cards for other expenses. This is especially true now that so many people's cash flow has been disrupted. Cards are also an important tool, because as this crisis has shown us, there are times when cash can't be used. Cards have been essential for tasks like purchasing supplies online during the COVID-19 crisis. 3. Consolidate Debt
For those with existing debt on cards, it can even be prudent to open another card at this time. The feature to look for is balance transfers. There are plenty of cards with low or even 0% interest that allow balance transfers. These allow consumers to move high-interest-rate debt to a lower interest rate. Over time, that can mean huge savings. Interest compounds over time in ways that can be very detrimental to consumers. Paying less money on the debt can be key to getting out from under debt more quickly. Balance transfers can be a great tool to limit an increase in a consumer's debt. Remember, charge cards are just a tool. They can be good or bad for consumers depending on the way that they're used. By using cards to consolidate debt, keep cash for liquidity and bridge gaps from one pay date to another, cards can be a part of the personal finance solution for millions of Americans.