Credit Card Tips Before and After Disasters
Written by: Kristy Welsh
Last Updated: July 24, 2017
When disaster strikes, the last thing you want to have to worry about is how you're going to pay for the aftermath. Yet, money matters rear their ugly heads certainly, and almost immediately, in the wake of a disaster. It's in cases like these when credit cards may be used to their full potential. May this serve as yet another reason to keep your credit in check.
1. Keep Your Credit Card Balances Near Zero
This way, if and when disaster strikes, you will have credit available for emergency expenses. Plus, the lower your balances, the better your credit utilization ratio and, in turn, the better your credit score. Of course, this need not — and should not — mean you avoid use of your credit cards on a regular basis. On the contrary, use them every month to make a purchase here or there, but with the intention of paying off the balance every month. If and when you do carry a balance month-to-month, make it a priority to at least make more than your minimum payment and avoid using the card again until the balance has returned to zero.
2. Record Your Credit Card Information
In the event that your credit cards are lost in a disaster, a list is invaluable and should include:
- Name of the credit card and the issuing bank
- Your account number
- Toll-free number for the issuing bank
- Recurring payments scheduled to be made from each account
As for where to store this list, you may consider your cell phone, provided you use password protection and encryption features. Otherwise, you may consider a safe deposit box or fireproof lock-box in your home. In fact, it may be a good idea to store a couple of copies of this information in a couple of these places, just in case one or the other proves inaccessible.
3. Research Credit Card Emergency Assistance Programs
A number of credit card issuers have emergency associated programs, which can help facilitate the search for hotel accommodations and travel. Ask your current credit card issuers if they have such programs or, if you're in the market for a new card, make this a priority feature.
4. Call Your Credit Card Issuers As Soon As Possible After Disaster Strikes
If you have lost your credit card, request another, which the issuer should be able to send to you via overnight mail. Also, ask them to consider suspending your minimum monthly payment and/or providing you with a credit limit increase to help you cover the cost of emergency expenses.
5. Use a Credit Card to Cover Housing, Food, Clothes and Other Disaster-Related Expenses
Though you may have insurance that covers the cost of most or all of the expenses associated with a disaster, it will probably be some time before insurance claims are processed and paid. This is the one time when it is advisable to live off your credit cards! If you've done a good job of keeping your balances low, you may even be able to use your cards to fund any necessary restoration or reconstruction projects.
6. Pay Down Your Credit Card Balances as Soon as Possible
It's devastating enough recovering from a disaster. The last thing you need is for it to instigate a mountain of debt that will only compound your anxiety and stress for months, even years to come. So if you do receive insurance money, put it fully toward any debt you charged for disaster-related expenses. And if none of these expenses are covered by insurance, take the time to sit down and review your budget. Once your basic living expenses have been provided for, and things have returned to relative "normal" again, cut back where you can to make more than your monthly minimum payments on your cards until they're paid down to zero.