7 Smart Ways to Use Your Credit Cards in a Recession

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.

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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:

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.