Struggling with credit card debt after a layoff? These 5 strategies can help

If you feel like you’ve hit a financial rough patch lately due to job loss, you’re definitely not alone. January saw record layoffs, up 118% from January 2025.

After a layoff, you may receive some severance pay and file for unemployment benefits. You may even consider a side hustle to generate extra income. Coming from someone who’s been laid off three times in a row, you’re going to be OK.

After taking care of essentials like housing, food and bills, you can come up with a plan and start chipping away at your debt. Even small charges can add up quickly, so it helps to start taking control now. CNBC Select covers five strategies that can help you handle (and pay off) credit card debt after a layoff.

I have 40+ credit cards — some with balances, some paid off — and each of my three layoffs left me wondering how I’d deal with ongoing credit card debt. 

First, if you know you need to carry a balance to make it through, take out all your cards and look at their interest rates. You can find it on your statement or in your online account. Sort them from low to high and, of course, use the card with the lowest interest rate and most available credit. If you only have a couple of cards, this will be a simple but important step.

Next, call your issuer; opening communication is the best course of action. Issuers have heard it all, and most have hardship programs, APR reductions and fee waivers in their toolbox. You won’t know if you don’t ask. 

Some issuers may even offer to pause your payment for a month or two to give you some breathing room. The important thing is to pay very close attention to the fine print. Note when the interest rate is set to expire, when payments will resume and any other details. With some fine-tuning, you can use your setback as an opportunity to get ahead. 

Whatever you do, you must keep making minimum payments. Failure to do so will result in penalties and can tank your credit score. After all, payment history is the largest component of your credit profile, and you want to protect your credit score after a layoff.

Put any due dates into a calendar, or another place where they’ll remain top of mind. You can be a day or two late paying if you absolutely must, but again, call your issuer if you think that might happen. 

Wondering how you’re going to make it, only to see a charge for an unnecessary subscription, is a uniquely terrible feeling after a layoff. Now’s the time to review all your spending — especially your subscriptions, which suddenly become insidious charges that feel like insult to injury.

See what you can cut. Lose a streaming service, downgrade to basic or ad-supported plans or hit the pause button on a membership. The best subscription tracking apps — like Rocket Money — can help you track all your services, their costs and cut unused (or unnecessary) ones.

You don’t have to live like a pauper; you can find lunch deals and happy hours instead of the usual full-price options, at least for a while. If you think you’ll be tempted by a sale, course or other offering, unsubscribe or unfollow. Now is not the time for quick dopamine hits, unfortunately. Just remember, there will always be more good deals. 

And if the idea of combing through your spending history gives you the ick, plug your info into a financial app like Quicken Simplifi. Even if there’s a charge, it usually pays for itself right away. Cancel it or use a free trial to get some ideas of where you can trim your budget.  

There are tons of “experts” willing to take your money — even when you’re already in credit card debt. No matter what they claim, many are in it for profit. But know there are nonprofit credit counselors available that are either free or charge a small flat fee. 

A credit counselor can hold your hand through the process and create a personalized action plan, without judgment or shame. When you consider a nonprofit credit counseling agency, choose one that: 

• Is accredited or certified by a reputable organization, like the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). 
• Is truly nonprofit. Check a company’s annual filings, which are a matter of public record. 
• Doesn’t push you to sign up or buy anything extra. Again, be leery of shady characters who prey on people at their most vulnerable.  
• Has good reviews. Check the Better Business Bureau (BBB) website to see if the agency has a record of complaints (and how they were resolved, if so). 
• Has free education materials or consultations. Most nonprofits offer classes, reviews or sliding scales for people in financial distress. 

One of the best tools that can also be a double-edged sword is the mighty balance transfer credit card. I have used this tactic many times to great avail, but you must be diligent about tracking when the intro APR period ends. 

Keep in mind that most credit card issuers require some proof of income for approval. If you're currently laid off, consider using severance, unemployment benefits, household income or other sources of income when applying, and be realistic about how much you can repay.

Balance transfer credit cards can be a boon during a layoff; you can typically get a 0% intro APR for 12 to 24 months, during which you can transfer and pay off your debt without interest charges. This isn’t a free pass, as you have a set number of months or billing cycles to pay it off, and the interest rate will go up after the intro period ends. But in a crunch, knowing you’re not accruing extra interest can feel like a huge weight being lifted.  

One of the best balance transfer offers on the market is the Wells Fargo Reflect® Card. You can get a 0% intro APR for 21 months on qualifying balance transfers made within 120 days of account opening (followed by a variable 17.49%, 23.99% or 28.24% APR). Note, balance transfers made within 120 days qualify for the intro rate, and the balance transfer fee is 5% with a $5 minimum.

If you opt for a balance transfer card, be sure to thoroughly compare your options. Outside of which card has the longest 0% offer, check to see if there are any rewards or welcome offers available. (In the case of the Wells Fargo Reflect, you won't earn rewards, but you do get some perks, like cell phone protection.) Also consider, with most cards, you’ll likely pay a balance transfer fee of around 3% to 5% of the total transferred, so factor that into your calculations. 

A sudden layoff can put you in a sensitive financial situation. Even still, here are a few things you never want to do: 

• Rack up new debt. Sometimes it’s unavoidable, but if your basic needs are covered, you might consider using your severance or unemployment benefits to pay off your balance.
• Take out new loans. Unless you're specifically opening a loan to help pay off debt, post-layoff isn’t the time to add to your balances. 
• Misuse a hardship program. Issuers have guardrails in place to help you get back on track (or stay on track). But this doesn’t mean you can miss payments or ignore your debt. 
• Forget to use your balance transfer card. Sometimes, you only get a promotional rate for balances transferred within a certain timeframe. This goes back to reading the fine print, but you definitely don’t want to miss the boat on consolidating your debt at a lower interest rate. 

And while you’re looking for your next opportunity, use every resource available to you. Scour your networks, put out feelers and try to stay positive. It may feel hard, but you’ll make it through. 

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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