When a recession is looming (or already here), you may wonder how to best handle your finances. After all, a recession — a period of time when the economy takes a deep dive — can trigger financial stress. Will you lose your job? Will you be able to keep up with everyday expenses?

With financial concerns like these swirling around in your head, you might decide to cut back on spending, boost your emergency fund or reassess your retirement savings. You might also be curious about how credit cards can figure into your recession survival strategy. Used wisely, credit cards can offer easy access to a line of credit when you need it most, reduce expenses through cash back rewards and provide a variety of valuable perks.

Here, we offer some expert advice about how to smartly use credit cards during a recession.

Monitor your credit card use

A recession isn’t the best time to rack up credit card charges for those cute shoes you’ve been eyeing or that big-screen TV you’ve been coveting. Instead, focus on using credit cards as tools to help you make it through a recession.

“Credit cards can provide a financial safety net in the event you don’t have an adequate emergency savings fund,” says consumer finance expert Andrea Woroch. “This way, you can pay necessary bills or unexpected expenses, without worrying how you’re going to come up with the cash.”

Set up alerts

To keep from running up too many charges on a credit card, think about activating account alerts that notify you when a purchase exceeds a certain amount (like $500) or the balance creeps close to a certain level (such as $5,000).

Automate bill payments

Juggling your finances during a recession is nerve-racking enough. You don’t need to add to your stress by missing payments. Therefore, it’s a good idea to automate credit card payments so you don’t miss a due date and possibly get slapped with late fees or a penalty APR, Woroch advises.

Reduce card debt

To help shield your finances from the impact of a recession, try to pay down as much of your credit card debt as you can. Our credit card payoff calculator is a good place to start.

“Debt can rob you of your future because you are using the money you earn today to pay off things from the past,” says personal finance professional Andrew Lokenauth, adjunct professor at the University of San Francisco’s School of Management. “If unpaid, debt can grow larger and larger with the interest and fees adding up.”

Avoid carrying a balance if possible

Ted Rossman, senior industry analyst at Bankrate, cautions that you should pay off credit card charges as soon as you can, to avoid piling up interest — every two weeks, if possible. Ideally, you should clear a balance before the credit card issuer tacks on any interest at all.

“Carrying credit card balances from month to month adds to the cost of repayment over time. Every dollar spent on interest is a dollar that won’t help you grow your savings,” says Bruce McClary, senior vice president of membership and communications for the National Foundation for Credit Counseling.

If not possible, lean on a card with 0% APR

If you forge ahead with credit card spending during a recession, and find you must carry a balance, your best bet may be to depend mostly, if not exclusively, on a good 0 percent APR credit card. A 0 percent APR card lets you temporarily avoid interest charges on purchases or balance transfers during a certain window of time, such as 15 months.

One example of this type of card is the BankAmericard® credit card. It provides a 0 percent intro APR on purchases and balance transfers (made during the first 60 days) across 21 billing cycles.

Create a budget

Lokenauth suggests setting up a household budget (if you don’t already have one, of course) so you can better manage your credit cards and the rest of your finances. He emphasizes that all sorts of software, websites and apps can help you construct and maintain a budget. Using Bankrate’s Home Budget Calculator is a great place to start.

“Not having a budget can make it difficult to know where you are spending your money or difficult to have control over your spending in general,” says Lokenauth. “Creating a budget will help you visualize where you can cut back spending and where you can save money.”

Use rewards to counter inflation and rising interest rates

Yes, rewards can be a valuable aspect of a credit card. Rossman notes that it doesn’t make sense to carry a balance for a long time at an APR of 18 percent in exchange for earning, say, 3 percent in cash back or travel rewards. In that scenario, the math probably doesn’t add up in your favor.

But, assuming you’re paying your bills on time and charging only what you must, rewards can provide a steady payback that can reduce your total outlay.

Maximize cash back

Start by making sure you have one of the best cash back cards in your wallet. To ensure you’re squeezing the most you can out of cash back rewards, plot a strategy for which ones to pull out of your wallet and for which purposes. Here’s one potential strategy:

“One of the best ways to save on your everyday expenses is by having a credit card that gives you flexibility both in the way you earn and in the way you redeem rewards,” says Elly Szymanski, assistant vice president of credit card products at Navy Federal Credit Union. “If you’re in a financial place where you can handle multiple cards in your wallet, this could also help maximize the value you get in return, as different cards have ongoing rewards for different types of spending.”

One advantage of a cash back card is that it can counteract the effects of inflation. In fact, just 2 percent cash back conceivably could furnish a better return than the average APY for a savings account (0.13 percent as of late August 2022).

Take advantage of credit card perks

The perks of a credit card might be just as valuable, if not more so, than the rewards it provides. For instance, your card might qualify you for purchase protections, extended warranties or roadside assistance. Or you may be able to score discounts on meals, car rentals, household services or clothing — from Amex Offers, for example, or from Visa.

“Recessions mean belt tightening, but there are still some areas where spending is necessary,” says McClary. “Using a credit card that gives you access to special discounts on essential purchases can be helpful during a recession, especially if your paycheck has taken a hit.”

Ask for help when needed

If a recession has battered your finances to the point that you’re struggling with your finances, don’t be afraid to seek help. You may be able to negotiate a payment plan with your card issuer that lowers your monthly payments, for example. Or you might reach out to a nonprofit credit counseling agency to help you climb out of a financial hole.

The bottom line

A recession, particularly when it’s coupled with inflation, can produce a lot of anxiety. In a July 2022 survey from Allianz Life Insurance Co. of North America, 66 percent of Americans said they feared a recession was right around the corner and 82 percent said they were worried about rising inflation chipping away at their purchasing power.

Fortunately, you may be able to ease at least some of your recession or inflation anxiety by wisely incorporating credit cards into your day-to-day finances. During rocky financial times, credit cards can help smooth things out by enabling you to cover emergency expenses, reap rewards on everyday spending and capitalize on money-saving perks.