More people are avoiding cash. That might not be a good thing

Mar 25, 2020, 9:43 AM | Updated: Jan 25, 2023, 11:59 am
(Photo Credit: CNN/Shutterstock)...
(Photo Credit: CNN/Shutterstock)
(Photo Credit: CNN/Shutterstock)

(CNN) — More people following “stay at home” orders during the coronavirus outbreak, and cash is no longer king. With concerns about passing around bills, the homebound are ordering take-out and shopping online using credit instead.

But relying heavily on credit cards could not come at a worse time for the millions who have lost income or suffered a job loss as a result of shutdowns. It’s especially bad for those who may have already been in debt.

“Household debt is at an all-time high,” said Michael J. Graetz, a law professor at Columbia University and co-author of “The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It. “People have no savings to fall back on. They were maxed out on credit cards with extraordinarily high interest rates even before the coronavirus. It is very worrisome.”

Household debt rose to $14 trillion in the fourth quarter of 2019, a new record, according to the Federal Reserve Bank of New York.

The reliance on credit has already begun, according to a study from LendEDU. Nearly 70% of those who lost a job because of coronavirus are taking on more credit card debt than planned. Of those who have had their work hours cut, more than 60% are using credit more. Even 37% of those whose job remains unchanged are relying on cards more.

Here’s how to make the most of credit cards now and avoid getting in trouble down the line.

Use the right card the best way

People turning to their credit cards more than usual need to keep an eye on their total spending in relation to income coming in, said Eric Powell, a chartered retirement planning counselor at RightPlan Financial in Lakeland, Florida.

“There is always the possibility of a decrease or total loss of income, now especially,” said Powell. “I like credit cards for the rewards that come with them, but being bored isn’t an excuse to buy unnecessary items.”

Right now, use the card with the lowest interest rate.

“If you have access to a zero-interest credit card, use it first,” said JP Geisbauer, a certified financial planner with Centerpoint Financial Management in Newport Beach, California. “If you don’t, use the lowest interest credit card.”

Keep your cost of borrowing as low as possible if you are regularly using credit, especially if you are worried about not being able to pay off the bill at the end of the month. That’s more important than credit card rewards right now, Geisbauer said.

There will also be a temptation to pull out money for the instances when you need cash.

“Avoid taking cash advances,” Geisbauer said. “These are usually the highest rates.”

Request the help you need

Regulators, like the Federal Deposit Insurance Corporation (FDIC), are encouraging banks to work with people struggling with payments. Your credit card company may be willing to negotiate with you to reduce your payments, adjust your interest rate or defer payments temporarily.

Top credit card issuers have responded with plans to support users, including Wells Fargo, Citi, Capital One, US Bank, Barclays, Chase, Discover, Bank of America and American Express.

“If your financial world has been turned upside down, the best time to call your credit card issuer and let them know is today,” said Matt Schulz, chief industry analyst at CompareCards.

There has been a lot of talk about what the Federal Reserve has done by cutting rates and government relief efforts, but those take time. Some of the changes that an issuer can offer will help you today, said Schulz.

“Reduced APRs that kick in quickly. Waived fees. Extended payment deadlines,” he said. “These can be very important in the short term, as you figure out how you will get to the end of this month, or the end of this week.”

But be careful. The credit card company may opt to reduce your credit limit, said Howard Dvorkin, founder of, a debt resolution resource site. But getting a lower interest rate might be worth the risk.

“I would advise that people drill down on their credit right now and see what opportunities you have to reduce your payment and reduce your interest,” Dvorkin said. “To reduce the interest is the ultimate thing.”

Keep total debt from spiraling

If you are already deep in credit card debt, Dvorkin said, a balance transfer credit card can help you pay off the debts, so long as you have a plan and get the payments done in the window of 0% interest. The best balance transfer credit card is the one that offers the lowest transfer fees with the longest 0% APR promotion period, Dvorkin said.

But this balance transfer method only works if you pay off your debts as soon as possible, he said, since the rate will be much higher after the introductory period. If you’ve already lost your job or expect to, and think you might not have income for a while, doing a balance transfer now could put you at risk.

The most important thing to do right now, said Dvorkin, is to avoid taking on too much debt. Only buy the essentials and keep your eye on your debt.

“It’s in your best interest to avoid panic buying and unnecessary expenses while this crisis lasts,” said Dvorkin. “Know that there is a solution to debt once this storm blows over, and, by not maxing out your credit cards now, you can put yourself in the best position possible.”

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Today’s Top Stories


In the golden age of space exploration we live in, cosmic revelations seem to occur more frequently...
Ashley Strickland, CNN

Cosmic seaplanes and self-growing bricks could help us explore other worlds

In the golden age of space exploration we live in, cosmic revelations seem to occur more frequently than ever before.
21 hours ago
The Chinese national flag is seen at the entrance to the Zhongnanhai leadership compound in Beijing...
By Zachary Cohen, CNN

A look at China’s history of spying in the US

The suspected Chinese surveillance balloon that violated American airspace this week has fueled a diplomatic crisis with the postponement of Secretary of State Antony Blinken's planned trip to Beijing.
21 hours ago
A balloon flies in the sky over Billings, Montana, U.S. February 1, 2023, in this picture obtained ...
Zachary Cohen, CNN

US military has shot down the Chinese spy balloon off US East Coast, US official says

The US military has shot down the suspected Chinese surveillance balloon over the Atlantic Ocean off the Eastern Seaboard, a US official said Saturday.
21 hours ago
The Goonies House...
Taylor Romine and Ralph Ellis, CNN

Man wanted for leaving a dead fish at ‘The Goonies’ house saved by Coast Guard in daring rescue

A man wanted by police in an incident at a house featured in "The Goonies" was the subject of a Coast Guard rescue when he was tossed from a stolen boat as it capsized, authorities said.
21 hours ago
A high altitude balloon floats over Billings, Mont., on Wednesday, Feb. 1, 2023. The U.S. is tracki...
Oren Liebermann, Haley Britzky and Michael Conte, CNN

Pentagon tracking suspected Chinese spy balloon over the US

(CNN) — The US is tracking a suspected Chinese high-altitude surveillance balloon over the continental United States, defense officials said on Thursday, a discovery that risks adding further strain to tense US-China relations. Pentagon spokesman Brig. Gen. Patrick Ryder said the US government has been tracking the balloon for several days as it made its way over […]
2 days ago
A federal law that prohibits people subject to domestic violence restraining orders from possessing...
Tierney Sneed, CNN

Court says gun law targeting domestic violence suspects is unconstitutional

 (CNN) — A federal law that prohibits people subject to domestic violence restraining orders from possessing firearms is unconstitutional, a conservative-leaning appeals court ruled Thursday. The ruling is the latest significant decision dismantling a gun restriction in the wake of the Supreme Court’s expansion of Second Amendment rights last year in the New York State Rifle & Pistol Association, Inc. […]
2 days ago

Sponsored Articles

Banner with Cervical Cancer Awareness Realistic Ribbon...
Intermountain Health

Five Common Causes of Cervical Cancer – and What You Can Do to Lower Your Risk

January is National Cervical Cancer Awareness month and cancer experts at Intermountain Health are working to educate women about cervical cancer, the tests that can warn women about potential cancer, and the importance of vaccination.
Kid holding a cisco fish at winterfest...
Bear Lake Convention and Visitors Bureau

Get Ready for Fun at the 2023 Bear Lake Monster Winterfest

The Bear Lake Monster Winterfest is an annual weekend event jam-packed full of fun activities the whole family can enjoy. This year the event will be held from January 27-29 at the Utah Bear Lake State Park Marina and Sunrise Resort and Event Center in Garden City, Utah. 
happy friends with sparklers at christmas dinner...

15 Easy Christmas Dinner Ideas

We’ve scoured the web for you and narrowed down a few of our favorite Christmas dinner ideas to make your planning easy. Choose from the dishes we’ve highlighted to plan your meal or start brainstorming your own meal plan a couple of weeks before to make sure you have time to shop and prepare.
Spicy Homemade Loaded Taters Tots...

5 Game Day Snacks for the Whole Family (with recipes!)

Try these game day snacks to make watching football at home with your family feel like a special occasion. 
Happy joyful smiling casual satisfied woman learning and communicates in sign language online using...

The Best Tools for Deaf and Hard-of-Hearing Workplace Success

Here are some of the best resources to make your workplace work better for Deaf and hard-of-hearing employees.
Team supporters celebrating at a tailgate party...

8 Delicious Tailgate Foods That Require Zero Prep Work

In a hurry? These 8 tailgate foods take zero prep work, so you can fuel up and get back to what matters most: getting hyped for your favorite
More people are avoiding cash. That might not be a good thing