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Have Credit Card Debt But No Job?

How to Deal with Credit Card Debt When You’re Unemployed

Have credit card debt but no job? Dealing with a mountain of debt can be hard enough as it is, but how are you supposed to manage credit card debt with no job?

“Job loss is an unfortunate reality that many Canadians have to face in their lifetimes. Compounding the stress is that this life event often takes you by surprise. What can be even more problematic is if you’re carrying debt when your income is interrupted,” says Jeff Schwartz, Executive Director, Consolidated Credit Canada.

To try to keep your credit history in good standing and to avoid taking on more debt in order to make ends meet, it’s important that you develop a plan to deal with your credit cards while you’re out of a job.

Here are some tips on dealing with credit card debt with no job:

Set a new budget

It’s time for austerity measures. Set a new household budget that cuts back on all unnecessary spending. Make sure you’ve got enough cash flow to cover your minimum payments and your basic expenses.

Check in with the emergency fund

Hopefully you’ve got a decent amount of rainy day savings, because that day has arrived. Estimate a reasonable timeline for how long you conservatively think that you’ll be out of work and how long the savings you’ve got on hand will last.

Try to extend it for as long as you can, using cash from a severance package or unemployment benefits to cover costs in the meantime as much as you can.

Make the minimum

For the short term, commit to making your minimum payments, so you can keep your credit history in good shape while keeping your cash flow as high as you can.  If you’ve got a significant amount of money saved, you may consider paying some of your debts off so you can eliminate that debt payment.

Don’t squeeze your cash flow too tightly. You don’t want to run out cash if your unemployment extends over a longer period than you anticipated, which means you’ll need to accumulate more debt just to make ends meet.


It’s a good idea to proactively reach out to your lenders and credit card companies to let them know that you’re unemployed. This lets them know that you are trying to make your payments and will most likely do what they can to work with you to keep your credit in good standing.

There may even be the option to lower interest rates and negotiate them or other company-specific programs, but you won’t know unless you ask.

Credit use while you’re unemployed

It’s important that you shelve your credit cards while you’re out of a job. Stick to your budget and cash living for the duration of your unemployment.

“It might seem like a reasonable short-term solution to take out debt to cover costs when you’re unemployed, but don’t do it. That is how small debts evolve into major debt problems, as interest accrues,” says Schwartz.

In particular, avoid taking out high interest payday loans or cash advances on your credit cards.

When you get a new job

Now that you know the stress of carrying debt when you experience a job loss, avoid this happening in the future when you’re back on your feet. Live well below your means, put as much as you can into savings and avoid accumulating more debt.

Estimated reading time: 3 minutes

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