7 Smart Ways to Use Your Credit Cards in a Recession
UpdatedAug 9, 2025
- 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.
Ways to control credit card spending:
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.
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 stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during July 2025. The data uncovers various trends and statistics about people seeking debt help.
Debt relief seekers: A quick look at credit cards and FICO scores
Credit card usage varies significantly across different age groups, reflecting diverse financial needs and habits.
In July 2025, the average FICO score for people seeking debt relief programs was 594.
Here's a snapshot by age group among debt relief seekers:
| Age group | Average FICO 9 credit score | Average Credit Utilization |
|---|---|---|
| 18-25 | 575 | 82% |
| 26-35 | 584 | 79% |
| 35-50 | 588 | 77% |
| 51-65 | 596 | 74% |
| Over 65 | 608 | 69% |
| All | 594 | 75% |
Use this data to evaluate your own credit habits, set financial goals, and ensure a balanced approach to managing credit throughout your life.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In July 2025, 30% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,203.
Here is a quick look at the top five states by average collection debt balance.
| State | % with collection balance | Avg. collection balance |
|---|---|---|
| District of Columbia | 23 | $4,899 |
| Montana | 24 | $4,481 |
| Kansas | 32 | $4,468 |
| Nevada | 32 | $4,328 |
| Idaho | 27 | $4,305 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
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.
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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