How to Manage Your Credit Card Debt When You Are Unemployed in UAE?

  | Published: 01 June 2021 | Last Updated On: 09 June 2021

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Unemployment comes unannounced and with a pandemic upending businesses, there has been a steep rise in this trend. Many fear losing jobs and during these times, it becomes difficult to manage your monthly bills and expenditures. Most importantly, credit card debt hurts your finances even more. When unemployed, one wrong step can push you towards debt. Therefore, you need to handle your credit card debts carefully.

Here are some tips that will help you in managing your credit card debt when you are unemployed in UAE -

  • Assess your finances
  • Contact your bank
  • Pay the minimum amount
  • Do not use your credit card
  • Borrow against your Life Insurance Policy
  • Check if you qualify for unemployment insurance cover
  • Pay with another credit with a cheaper credit card
  • Balance transfer credit card
  • Organize your expenses
  • Consult a credit counsellor
  • Seek credit card debt settlement/hardship programs

Assess your finances

Before taking a step towards handling credit card debt, you should evaluate your financial condition. Check your account balance and money in hand before making any decisions. Assess your finances considering the possibility of a longer period of unemployment. Hopefully, that will not be the case but such an approach makes you more cautious and calculative towards your expenditure.

Contact your bank

Once you have made all the calculations, you will know if you can pay your monthly credit card debt or not. In case your finances do not allow you to pay it, contact your bank as soon as possible. Many credit card providers agree to reduce interest rates or minimum due on your card temporarily in case of unemployment. If you have already accumulated penalties, request your bank to waive those fees. If you have been making your payments punctually in the past, you can also ask the bank to consider temporary forbearance, in which case, the case will temporarily relieve you from paying your bills.

Pay the minimum amount

We have often advised you to not pay the minimum amount regularly on your credit card otherwise your credit score may take a hit. Besides, paying the minimum amount attracts more interest rates causing you to spiral into debt. However, when you are unemployed, paying the minimum amount is the most viable solution to deal with your credits. In temporary situations such as unemployment, the minimum amount assures your bank that you are an honest customer. Besides, it will maintain your reputation as a reliable borrower. Once you have communicated with your bank and the bank has reduced your interest rate or minimum dues, paying the minimum amount becomes an even more convenient option.

Do not use your credit card

In case you are unemployed and already under credit card debt, you should avoid adding more debt to your card. If you do not have adequate savings to pay your monthly bills, consider borrowing a personal loan. A personal loan is a cheaper option than a credit card since the interest rate on a personal loan is lower than the interest rate on the credit card. While taking a personal loan, do not borrow too much amount otherwise your debt will further increase. You can apply for a personal loan as per your needs at Do not use your credit card unless it is the last option.

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Borrow against your Life Insurance Policy

Your life insurance policy is more than just a life cover. In difficult times, you can borrow money against a life insurance policy at a minimum rate of interest. However, before applying for a loan against your insurance, read your policy documents carefully.

Check if you qualify for unemployment insurance cover

At the time of applying for a credit card, some credit card companies provide you with unemployment/credit shield insurance which covers you in case of unemployment for a few months. Consult with your bank if you received the cover and whether you qualify for it.

Pay with another credit with a cheaper credit card

If you have another credit card that offers a lower rate of interest, check your credit limit on the card and pay for your credit card bill. Some credit companies allow you to pay for your card bill through another credit card. This will buy some more time to find a job and clear your debts without paying too much interest. Though, not many banks allow this due to the fear of credit card fraud.

Balance transfer credit card

If you own a balance transfer credit card, now is the time to use it. A balance transfer credit card enables you to transfer your credit card debt to another bank’s credit card at lower interest rates for shorter terms with easy installment plans. This will allow you to partially get rid of your minimum due on time till you do not find the right job.

Organize your expenses

Revisit your monthly budget and prioritize things. Divide expenses into several categories such as necessary, reasonable, luxurious, etc. Such a categorization of your expenditure will help you in reducing your expenses ensuring that your savings last longer.

Consult a credit counsellor

Though this might seem expensive, a credit counsellor will offer you debt management plans that can help you in budgeting and identifying strategies to deal with your debt. Credit counselling agencies will also negotiate with your bank on your behalf fetching the best negotiations for you.

Seek credit card debt settlement/hardship programs

If none of the aforementioned solutions is working for you, you can seek a credit card debt settlement plan. This is the last resort that will help you in clearing your debt. Your credit card provider will formally lower your required minimum monthly payment for a longer period if they think that it is the only solution to prevent you from defaulting. However, this is a formal settlement that will reflect in your credit history and hamper your credit score.

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Naturally, unemployment causes anxiety and stress but strategizing your expenditure and following these steps may help you in effectively dealing with your credit card debt without hurting your finances.