7 Smart Ways to Use Your Credit Cards in a Recession
- You can carry credit card balances to preserve your cash during a layoff.
- Control spending and use rewards to pay for essentials.
- Consider debt relief if your credit card debt becomes unaffordable.
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Credit cards could help you manage your finances when used strategically. When the economy is going through a rough patch, wise credit card strategies can help you stay on the path toward financial success.
Conventional wisdom for how to use cards (pay off your balance each month, use autopay) can fall flat during financially turbulent times. Recessions call for an update, a new way of thinking. Let’s take a closer look at seven smart ways to use credit cards in a recession.
1. Look for Changes to Rewards and Benefits
Check with your credit card issuer for updates to rewards or benefits, which may shift toward essentials like gas or groceries during a recession. That way, you can prioritize using credit cards that give you the best rewards.
2. Carry Debt When You’re Low on Cash
During recessions, prioritize immediate financial needs over debt payoff. You may need your cash to cover expenses like your rent, mortgage, or another emergency expense that you can’t put on credit.
This is a short-term strategy. Credit card interest rates are typically high. Without a repayment plan, you could spiral further into credit card debt. Create a repayment plan to spend flexibly without digging yourself into a hole.
3. Adjust or Turn Off Autopay
During a recession, when your checking account balance is low or unstable, you can adjust autopay to avoid overdraft fees. One option is to set your autopay to cover the minimum payments only. You can pay the rest manually as your budget allows.
Another option is to turn off autopay and pay 100% manually until you feel more financially stable. You run the risk of missing a payment, but you don’t have to worry about overdrawing your linked checking account and incurring fees. Avoid the greater threat.
4. Avoid Canceling Your Cards
Avoid canceling your credit cards during a recession. Keeping the account open but the balance low (or at zero) could help you in two ways.
One, it gives you a way to handle an emergency expense. Two, it could help you maintain a good credit standing. Part of your credit score is based on your credit card balances compared to your credit limits. The more available credit you have, the better.
Paying an annual fee for a credit card? Call your issuer and ask them to waive it. They might. If they don’t, ask if they can downgrade the card to a version with no annual fee.
5. Prioritize Cash Back Cards
Shift your attention to cash back cards during a recession. Some cash back cards will refund you a percentage of purchases on specific spending categories like gas and groceries; others offer flat percentages on all purchases.
Example cash back cards as of March 2025:
| Card Name | Reward Rate | Categories | Annual Fee | Sign-Up Bonus |
|---|---|---|---|---|
| Discover it® Cash Back | 5% (rotating categories) + 1% | Quarterly categories | $0 | $200 (first year) |
| Citi® Double Cash Card | 2% (1% on purchases, 1% on payment) | All purchases | $0 | $200 |
| Blue Cash Everyday® Card | 3% on gas and groceries | Gas, groceries, online retail | $0 | $200 |
6. Look into an Installment Loan Program
Some credit cards offer installment loans that let you pay for purchases in monthly installments; in exchange, you pay a monthly fee or fixed interest rate.
7. Control Credit Card Spending
Be mindful of your spending habits, create a budget, and do your best to only buy what you need and can afford. Even if you’re lucky enough to remain employed, recessions are uncertain times, and excessive credit card debt can hurt your financial goals far into the future.
Some ways to control credit card spending include:
Track spending: Use a budgeting app to track your spending.
Budget: Create a budget so you know exactly how much you can spend monthly.
Use cash sometimes: Leave the credit card at home and spend with cash when you want to limit spending at a specific venue, like a restaurant or a bar.
Moderation is key. Credit cards give you flexibility, but they also encourage spending. No amount of credit card rewards will solve a spending issue—credit cards make it easier to spend more, not harder. If you struggle with overspending, consider ditching the card completely.
Options for Managing Credit Card Debt in a Recession
Need help with debt in an unstable economic situation? Here are a few ideas.
Consider credit card counseling
Credit card counseling can improve a worsening debt situation. You work with a credit counselor to create financial strategies and negotiate debt repayment plans with creditors. A combination of professional guidance and financial benefits can help you pay off debts in three to five years.
Consider debt relief
Debt relief can unstick you when you’re trapped in deep debt. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants help you find solutions that improve your financial future.
Debt relief by the numbers
We looked at a sample of data from Freedom Debt Relief of people seeking credit card debt relief during July 2025. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.
Credit Card Usage by Age Group
No matter your age, navigating debt can be daunting. These insights into the credit profiles of debt relief seekers shed light on common financial struggles and paths to recovery.
Here's a snapshot of credit behaviors for July 2025 by age groups among debt relief seekers:
| Age group | Number of open credit cards | Average (total) Balance | Average monthly payment |
|---|---|---|---|
| 18-25 | 3 | $8,893 | $283 |
| 26-35 | 5 | $11,976 | $366 |
| 35-50 | 6 | $16,081 | $431 |
| 51-65 | 8 | $17,231 | $523 |
| Over 65 | 8 | $18,053 | $499 |
| All | 7 | $15,142 | $424 |
Whether you're starting your financial journey or planning for retirement, these insights can empower you to make informed decisions and work towards a more secure financial future
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In July 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Cole Tretheway
Cole is a freelance writer. He’s written hundreds of useful articles on money for personal finance publications like The Motley Fool Money. He breaks down complicated topics, like how credit cards work and which brokerage apps are the best, so that they’re easy to understand.
Reviewed by
Kailey Hagen
Kailey is a CERTIFIED FINANCIAL PLANNER® Professional and has been writing about finance, including credit cards, banking, insurance, and retirement, since 2013. Her advice has been featured in major personal finance publications.
What happens in a recession?
Unemployment rises and people spend less overall.
What happens to interest rates in a recession?
Interest rates typically fall during recessions. The Federal Reserve drops rates to stimulate a slow economy, then raises rates after.
What is stagflation?
A combination of high unemployment and inflation, when prices go up across the board.
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