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How to Use Credit Wisely During the COVID-19 Pandemic

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Tips for Managing Your Credit in Uncertain Times

If you’re one of the millions of Americans suddenly facing a loss of income due to the coronavirus pandemic, you may be tempted to cover your expenses with one or more credit cards. A recent study revealed that nearly three-fourths of those who lost their job as a result of the coronavirus situation are taking on more credit card debt than planned.

But should you? While the answer will be different based on individual circumstances, there’s a right way to use your credit card wisely during these unusual times.

6 Tips for Managing Your Credit During the Pandemic

  • Use credit for the right types of purchases.

    Using a credit card during an emergency is like taking out a loan. If you can’t pay it back all at once, you’ll have to pay interest. If you need to use credit, try to use it for basic living and job-hunting expenses only, such as rent, utilities and groceries.

  • Pick the right card.

    The average American has four credit cards, so look at the terms and conditions to find the one that will cost you the least to use. The lower the interest rate, the better. But also look at late fees, over-the-limit fees and payment grace periods. Take all those potential costs into account when deciding which card to use.

  • Avoid cash advances.

    While it’s tempting to take a cash advance, credit cards treat cash advances differently from purchases. Cash advances typically incur a transaction fee that adds to the amount you’ll owe. In addition, the interest rate is usually higher than the rate incurred for purchases, and the interest begins accruing from the day you take the advance. Cash advances also often don’t qualify for rewards that your card may offer.

  • Pay off your debt on time and keep a low debt-to-credit ratio.

    Making at least the minimum monthly payment on time and keeping your purchases at a certain level compared with your available credit are important to protecting your credit score. In normal times, it’s best to keep your credit utilization – the percentage of your available credit that you use – to below 30 percent. But going over the utilization rate won’t damage your credit score the way a missed payment does, so keep to your payment schedule.

  • Redeem credit card rewards for maximum value.

    If you have a credit card that accrues rewards, then now might be the time to redeem them. Some programs let you convert rewards to cash, which might be a good strategy in this emergency. If not, use them for basic necessities when possible, or for an out-of-the-ordinary treat to get you through these tough times.

  • Call your lenders to see if they’re offering altered payment options to help consumers affected by furloughs and unemployment.

    Many mortgage and auto lenders are letting borrowers lower or defer payments. Some credit card companies are lowering interest rates, reducing required payments or letting customers take a temporary break from payments.

While using credit cards during a crisis may not be your first choice, if you use them responsibly, they’ll be an investment in a more secure future.


In a situation like the coronavirus pandemic, managing your credit wisely is more important than ever. For more personal finance tips, check out the rest of Comenity’s financial education resources.

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