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Experts agree: Only apply for a new credit card during a crisis like coronavirus if you also take these 4 steps

A credit card can be a helpful safety net during economic hardship. CNBC Select asks experts about applying for a new credit card during a national emergency like a pandemic.


Industry shutdowns, social distancing, recession: Just one quarter into 2020 and the nation's economic outlook has pivoted drastically downward due to the coronavirus pandemic.

While small businesses weather revenue losses and many employees are forced to take unpaid leave, today's consumer might think they need another credit card just to get by. 

But how do you really know if now is the right time to apply for a new card, especially during a time of so much uncertainty?

Below, CNBC Select spoke with four financial experts about whether you should apply for a new credit card during a major financial crisis, and we offer some strategies to plan for an uncertain future.

Should you apply for a credit card during financial hardship?

Experts agree that a credit card can help you stay afloat in an economic crisis, but you should always keep your long-term financial health top of mind.

Many card issuers are offering some form of relief during coronavirus, but if you need more breathing room you could consider opening a 0% APR card to save on interest. If you have good to excellent credit, a 0% APR card can help you cover immediate expenses and give you the flexibility to pay them off over time.

For example, if you qualify for the Chase Freedom Unlimited® card, you could use it as a backup to your emergency savings to stock up on extra food or cover an unexpected expense during the current financial lull. New cardholders can take advantage of 0% APR on new purchases for 15 months (then 19.49% - 28.24%).

But Alex Wilson, a Georgia-based certified financial planner, stresses the importance of paying back your balance in full before your promotional financing period is over.

"The majority of people signing up for a 0% offer will not pay off their balance in time, allowing [card issuers] to charge accrued interest on the account," she says.

Wilson's advice? "Don't allow the credit card company to make money off you. Instead, make money off them by paying your balance off before the promo rate ends."

What to do when you apply for a new credit card

"It's best to go in with the mindset that applying for a 0% APR card is only the first of many steps you'll take," R.J. Weiss, a certified financial planner and founder of the personal finance site, The Ways to Wealth, tells CNBC Select.

If you decide to get a new credit card to ease financial hardship, there are four important steps you should actively take to ensure the card helps you, rather than harms:

1. Reduce your monthly expenses

"Consumers should be taking all possible measures to avoid increasing debt at this time," Leslie Tayne, debt-relief attorney and founder of Tayne Law Group, tells CNBC Select.

If you've already got the basics in your cabinets and pantry, reassure yourself there is no need to stress shop. Instead, focus on using your resources conservatively to buy only what you need.

Cancel unnecessary vacations, put home renovations on the back burner and hold off on buying that new pair of shoes. In fact, Amazon.com has placed restrictions on shipping nonessential merchandise through April 5 in order to prioritize delivering only household goods and medical supplies.

2. Replace lost income

It's true that a national quarantine offers time for rest and self-reflection, and it might be the perfect time to cozy up for a family movie marathon.

But if your paycheck has been hit by the economic impact of social distancing and supply chain squeezes, you may want to look for ways to earn side income.

Experts agree that relying solely on credit cards, which have the highest interest rates among credit products, to get you through an economic downturn can set you up for long-term financial stress. It's not necessarily easy to find extra work at this time, but  an online side hustle could help ease your mind.

3. Pay off existing credit card debt strategically

"It's extremely important to stay focused on paying off credit card debt and building up emergency savings during this time," Sophia Bera, certified financial planner and founder of Gen Y Planning, tells CNBC Select.

But if your income has taken a hit, and you don't have room in the budget to pay more than the minimum payment on your high-interest credit card debt, you should try to be strategic about your debt repayment plan. 

A balance transfer card with 0% introductory APR can assist in this scenario, but only if you understand how a balance transfer card works

If you have a $3,000 balance on a card with 15.24% APR and decide to make $100 monthly payments, it would take you 39 months to pay it off, and you'd pay $800 in interest.

On the other hand, if you were to transfer your $3,000 debt to a card with no interest for six months and a 15.24% APR once the intro period ends, your debt payoff plan would look like this:

  • Total payoff period (6 months no interest, 29 months at 15.24%): 35 months
  • Interest charges: $480

Even with a balance transfer fee (typically 2% to 5%), the second option would still save you considerably.

If you have a good or fair credit score, you might consider the Navy Federal Credit Union Platinum Credit Card. It comes with a 0.99% intro APR for the first 12 months on purchases and balance transfers. There is no balance transfer fee (typically 3%). After the promotional period ends, your standard APR will rise to 8.99% to 18.00% variable.

And if your credit score is excellent, you could likely qualify for a balance transfer card with no balance transfer fee and a longer intro period.

4. Have an emergency savings plan

The final step is to make an emergency savings plan. Credit cards give you access to a fast and convenient way to pay for unexpected purchases, but if you don't have cash to make your payments on time, you'll be hit with penalty APRs and fees.

Most experts advise saving up six months or more of your regular living expenses to prepare for unforeseen circumstances. If you've already had to dip into your savings during the coronavirus outbreak, resist the temptation to rack up charges on your credit card or overspend just to get a welcome bonus. Instead, look ahead for upcoming opportunities to save as you trim unnecessary spending for the year, whether that's dropping your gym membership or cutting back on grocery shopping.

Whether it's the refund from a trip cancellation or the money saved on gas while you temporarily work from home, take every chance to put the extra money into your savings over the next few months. Experts agree — you'll be glad you did.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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