Credit card vs. savings account: What to use when you're unemployed
Unemployment is an unsettling situation that, for many, means a lack of steady income. As of Aug. 2025, 4.3% of Americans — 7.4 million — were unemployed and actively looking for work, according to the Bureau of Labor Statistics. If you’re part of that demographic, here’s what to know about using a credit card vs. using your savings account to meet your expenses.
Should I use my credit card while unemployed?
While you may be able to get by with your savings in the short term, long stretches of unemployment may make you consider using your credit card to meet your financial needs. Whether or not you should use your credit card will depend on your unique situation but in general, the high rates of interest that typically come with carrying a balance on a credit card can mean incurring expensive debt, which can be a dangerous proposition when you’re lacking a steady income.
An exception to this is using a card with a 0% APR offer, which means that for a promotional period of time, purchases with the card won’t accrue finance charges. Of course, you’ll still owe the bank for the purchases you make and the introductory 0% offer doesn’t last forever, but it may help you get by in the short-term.
If you are in a situation where your credit card is the only option to get the necessities you need while you’re out of work, aim to make at least the minimum monthly payments on your card to prevent damage to your credit score.
Can I get a credit card while unemployed?
Although it might be possible to get approved for a credit card when you’re unemployed, nearly all applications will ask you for your income. Lenders want to make sure you can pay them back, and they’re unlikely to give you a line of credit if you look like a high-risk customer.
However, if you still have other types of alternative forms of income, such as a side gig, freelance work, or passive income, you may still qualify. Passive income can take a variety of forms, ranging from alimony, child support, inheritance money, investments, public assistance, retirement funds, or Social Security funds.
There’s also the issue of adding a new line of credit when you don’t have a steady income. Studies have shown that having a credit card creates temptation for many to spend above their means and this could certainly ring true during times of unemployment.
Should I use my savings account while unemployed?
The Federal Reserve’s 2024 Survey of Household Economics and Decisionmaking revealed only 63% of households could cover an emergency expense of $400 or less. In an ideal scenario, you’d have an emergency savings account with several months’ worth of living expenses set aside. If you’re fortunate enough to have money in a traditional savings, high-yield savings, money market or even a checking account, this is exactly the time to use it even if you haven’t earmarked it as an emergency fund.
Using your available cash for expenses provides a buffer that won’t accumulate debt or interest like using a credit card or taking out a personal loan. Keep in mind that withdrawing money from other types of savings or retirement accounts, including 401ks and Roth IRAs, is often more complicated and can have high penalties if you withdraw money before the investment has matured or you’ve reached full retirement age.
Related: The best high-yield savings accounts
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Other financial moves to make
When you’re out of work and looking for ways to make ends meet, it can be tempting to simply put your expenses on a credit card and figure you’ll deal with it down the road. But there are strategies you can employ to reduce your expenses and keep your head above water. Consider one or more of the following:
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Take a deep dive in your budget.Saving where you can should be a top priority until you secure a new position. You might want to cancel subscriptions, switch to a cheaper cellphone brand, buy groceries in bulk and any other realistic ways to trim your expenses.
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Consider alternative jobs. While you explore new job opportunities in your field, consider part-time or other side gigs, like working as a rideshare driver, package or grocery deliveries, pet-sitting or other relatively low-barrier ways to generate income.
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Sell your unwanted or unused stuff. The resale market is booming and it’s possible you can earn some money by clearing out household items or apparel that you weren’t using.
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Consider taking out a low-interest loan: Depending on your financial circumstances, it may make sense to take out a loan to provide you with a cushion during your period of unemployment. Credit unions and smaller community banks often have better rates than big banks and traditional lenders.
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Contact your lenders. You may also want to reach out to your credit card issuers, auto lenders and mortgage lenders to let them know of your circumstances and ask them if they offer hardship or forbearance programs where they can temporarily pause or lower the interest rates on your existing loans. Before entering into any kind of agreement, however, make sure you are clear on the terms as it could have a negative impact on your credit score.
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Meet with a nonprofit credit counselor. Unlike for-profit companies that claim they can reduce what you owe and instruct you to stop paying your bills, wrecking your credit score in the process, a nonprofit credit counselor can help you determine the best plan for your circumstances. The National Foundation for Credit Counseling offers a wealth of resources to help you find a reputable counselor in your area.
Read more: Are debt relief programs legit?
Is it better to use my credit card or savings account when unemployed?
Between the two options, using your savings account is a smarter money move than using your credit card when you’re out of work, as you won’t accrue any additional debt this way. If you’ve depleted your savings and are in dire need of funds, seeking a personal loan is the next best option as using a credit card without a repayment plan is an extremely expensive option. The exception to this is if you open a card with a 0% APR offer on purchases to buy yourself some time until you find employment without accruing high-interest debt.
This article was edited by Robin Saks Frankel
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
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