It's rare that you'll hear a financial expert tell you to put money on a credit card unless you're paying off your statement balance in full every month. Credit cards come with high interest rates, which makes for extremely expensive debt so paying off your balance can become a burden. But extreme times may call for extreme measures.
Orman recommends swiping your credit card so you can save cash
"You need to be keeping every penny that you have," Orman said. "And what that means is, if you have available credit limit on your credit cards, I personally would be charging everything I could on my credit cards, keeping the cash that I have absolutely safe and sound, and paying the minimum payment due on my credit cards when the bills come in."
Making the minimum payment each month will minimize any damage to your credit score. Your payment history makes up the largest percentage of your credit score. Your credit utilization ratio how much of your available credit you're using is a close second, though, so beware that putting more on your card will likely cause your score to decrease at least a little bit.
Right now, Orman thinks you should focus on keeping cash on hand for expenses you can't put on a credit card. Once you have a job and are bringing in income, you can look into paying off any credit card debt you've built during the pandemic, Orman said.
Credit card companies might lower credit limits like they did in 2008
Orman remembers when credit card issuers lowered customers' credit limits during the 2008 financial crisis. Many of the people she worked with at CNBC, where she hosted The Suze Orman Show at the time, faced this problem. Their credit card companies slashed their credit limits to their amount of credit used.
"Meaning if they had a $5,000 credit limit and they had charged up $3,000, their new limit was $3,000," Orman said. "So they couldn't charge anymore on their credit card."
Orman worries if millions of people can't pay what they owe credit card issuers after the deferral period ends, then companies will decrease credit limits again.
She thinks it's worth paying interest on your credit card balance to keep cash close in case companies lower credit limits again. Rather than use cash now and assume you can lean on your credit card later, you can use your credit card now and depend on cash later if your limit goes down.
You may not need to rely on a credit card if you already have emergency savings
If you've already built a reliable emergency fund , you may be the exception to Orman's advice about credit cards. You may have the means to rely on cash for months.
Orman says people should have at least eight months of expenses in emergency savings to hold them over if they lose their jobs and are looking for work more than the typical advice of three to six months' worth. "The truth is it will take you at least eight months to one year, if you're lucky right now, to get another job," Orman said.
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