Using a credit cardDespite experts now saying the recession officially ended in June, the job market is still bleak. Many Americans have lost their jobs, had their wages or hours cut or go to work every day praying they don't come home with a pink slip. While many of us feel powerless about our employment situations, one area where we can -- and should -- take charge is in our credit card habits before and during a period of unemployment.

Many of us still have the mindset that credit cards are a good fallback if we find ourselves out of work and short on cash to pay for basic living expenses. This is a bad idea for two reasons:

  • Jobs are harder to find right now. Even if you've been laid off in the past and were able to land on your feet in another position in a matter of weeks, there's no guarantee that will happen this time. Also, the job you do find might not be close to the old one in terms of salary.
  • Many of us have already been over-relying on credit cards since the equity in our homes dried up; and you might already be overextended, which means even a small increase in your use could trigger a drop in your credit limit or an increase in your interest rate (thanks to the CARD Act, any increase wouldn't apply to your existing balance, at least).

As this article points out, how to handle your credit cards - and debt - will differ depending on your financial situation. WalletPop got in touch with Bryan Schlussel, a certified consumer credit counselor at the nonprofit credit-counseling organization CredAbility in Atlanta, Ga., for some expert advice on how to keep your pink slip from leading to red ink.

"You want to avoid late payments on credit cards," Schlussel told WalletPop in a phone interview. "The number one thing is to avoid late payments." As he points out, a growing number of employers take a look at your credit report before hiring you. If you're out of work and missing payments, that's going to drag down your score, which -- rightly or wrongly - could impact your ability to secure future employment.

If you have a little time before the ax falls, consider yourself lucky. If you have revolving debt or if you don't have the six months' worth of living expenses that experts recommend as an emergency fund, there are still a couple actions you can take. Schlussel says the first thing to do is draw up a complete budget and eliminate everything that's not totally necessary. That should give you a little more each paycheck or each month.

If you have a six-month emergency fund, good for you! Put that extra money toward paying down your credit cards. If you have both debts and no emergency fund, "pay yourself first," says Schlussel. In other words, keep making the minimum payments, but don't try to get rid of your balances if it means you'll have nothing in the bank to live on if your job disappears. Whatever your situation, experts recommend drastically curbing or eliminating the use of your cards to keep your balances from ballooning further.

It can be a temptation to look at credit cards as a fallback, but using them to sustain your current lifestyle after a job loss is a prescription for even bigger problems in the future.

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