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Whether or not the U.S. economy is heading into a recession is debatable; some might argue that we’re already in the midst of one. Even with a recession looming, there are financial tools available to help keep us on the right track. When used correctly, credit cards can be one tool to help consumers save money and manage cash flow, especially in a volatile economy.
Best credit cards to have in a recession
Here are a few of the top picks for the best credit cards to consider using during a recession.
Chase Freedom Unlimited®: Best for everyday spending
The Chase Freedom Unlimited offers up to 5 percent cash back on everyday purchases, such as Lyft rides (through March 2025) or travel purchased through the Chase Ultimate Rewards portal. Plus, you can rack up even more on your essential purchases with 3 percent cash back on dining and drug store purchases and 1.5 percent cash back on all other categories.
Where the Chase Freedom Unlimited really shines is the generous introductory APR on purchases and balance transfers. You’d get all of these perks without an annual fee, chipping away at even more added charges. However, there is a 3 percent balance transfer fee, which actually increases to 5 percent after the first 60 days of account opening.
Discover it® Secured Credit Card: Best for building credit
The Discover it® Secured Credit Card is a solid option for consumers who want to establish or rebuild their credit while also earning rewards — which is often hard to find with secured credit cards. Earn 2 percent at gas stations and restaurants (on up to $1,000 in combined purchases per quarter, then 1 percent) and 1 percent cash back on all other purchases. With no annual or foreign transaction fees, this card is an ideal solution if you travel outside the country.
There is no introductory purchase APR with this card, but there is a 10.99 percent introductory balance transfer APR for the first six months (then 28.24 percent). Another bonus with the Discover it® Secured Credit Card is the cash back match you earn at the end of the first year — money that goes straight to your bottom line.
Wells Fargo Reflect® Card: Best intro APR on purchases
The Wells Fargo Reflect Card also offers an introductory APR on purchases. If you are facing a large purchase, this intro APR could give you ample time to make payments without added interest. Plus, it skips the annual fee, making it even more attractive. If you use the card to pay your cell phone bill each month (which you’re likely spending money on anyways), then you receive up to $600 of cellphone protection for eligible theft or damage.
While the card does not offer any rewards program, the ongoing variable APR for balance transfers could be lower than the current credit card interest rate depending on your credit score.
Blue Cash Everyday® Card from American Express: Best for grocery and gas purchases
The Blue Cash Everyday Card from American Express offers an impressive 3 percent cash back on U.S. supermarket purchases, gas stations and U.S. online retail purchases (for up to $6,000 in purchases per year in each category, then 1 percent). Plus, 1 percent cash back on all other purchases. It’s a card designed for everyday purchases and ideal for families with sizable grocery budgets.
Additionally, there is no annual fee and a generous intro APR on purchases and balance transfers, making it ideal for larger purchases or paying down your existing high-interest credit card debt. But be careful with late payments with this card — one late payment tacks on a $40 fee plus a higher penalty APR for six months.
BankAmericard® credit card: Best for long intro period on both purchases and balance transfers
The BankAmericard credit card features a rare, long 0 percent introductory APR on both purchases and balance transfers — up to 21 billing cycles (then 16.24 percent to 26.24 percent variable). You’ll have to take advantage of the balance transfer within the first 60 days of account opening to get the introductory rate. As long as you complete the transfer in that window, you can use this time to make significant payments toward your credit card debt. Or, you could use the introductory period for a larger purchase and avoid paying more interest.
The card doesn’t feature too many additional perks, like a rewards program, but it also doesn’t have an annual fee. If you accidentally miss a payment, you won’t be penalized with a penalty APR, further supporting your debt payoff strategy.
The information about the BankAmericard® credit card was updated on August 9, 2023.
How to maximize your credit card during a recession
With a little strategy, you can maximize your credit card perks and benefits to help offset some of the financial sting during a recession. The key is to use your credit cards for expenses you budget for regularly and not overspend on items outside your budget.
Use high-earning cash back cards for essential spending categories
One way to offset higher inflation is to use a high-earning cash back credit card specifically for your essential spending categories, such as groceries and gas. You often already have to budget for these, and some of the best cash back credit cards offer as much as 5 percent cash back.
Make the most of zero-interest offers
If you know you have an upcoming larger expense, such as a new mattress or appliance, look for cards offering introductory 0 percent interest on purchases. The length of time varies, but some cards offer up to 21 months to pay off a large purchase without added interest.
Earn and use your sign-up bonus
Plenty of credit cards offer sign-up or welcome bonuses if you meet the spending threshold within the specified time. Taking advantage of these lump sum bonuses can boost your reward potential early on.
Try a balance transfer to pay down existing debt
If you have existing high-interest credit card debt, consider transferring a balance to a card with an intro offer on balance transfers. The best balance transfer cards can help you aggressively pay down debt without paying interest for a specific timeframe — but remember to factor in the cost of the balance transfer fee.
Things to avoid with your credit card during a recession
While credit cards can be a valuable financial tool, it’s possible to damage your finances if you’re not careful with how you use them. During a recession, you may find it harder to manage your credit cards if your dollar isn’t stretching as far. Still, if possible, here’s what you should avoid:
- Carrying balances. Borrowing money is getting more expensive, and carrying a balance over each month will cost you more in the long run.
- Missing payments. A missed payment not only results in a late payment fee but could jeopardize any active 0 percent APR offers on purchases or balance transfers, plus you could owe additional interest. Issuers also report late payments after 30 days to the credit bureaus, which could lower your credit score.
- Opening too many new cards at once. Doing so can make you appear riskier to lenders and could impact your chances of a loan or card approval further down the line.
- Closing old and unused credit card accounts. Creditors like to see a healthy credit utilization ratio, which is simply the amount of available credit you have versus the amount of credit you use. Closing unused accounts can decrease your available credit and affect your credit utilization.
More ways to prepare your finances for a recession
Credit cards are one of many tools available when we experience a recession. Still, there are other tools and practices you can consider to help you out.
Establish a budget
A monthly budget acts as a guide for your money, telling each dollar where it should go each month. The key is to find a budget that works for you and adjust it accordingly. It may take time to learn how to budget, but if you start small and stay consistent, you’re already on the right track.
Build an emergency fund
An emergency fund is money you set aside explicitly earmarked for unexpected expenses, such as a medical bill or major car repair. You should also be able to access these funds fairly quickly. By establishing an emergency fund — even if only a small amount — you won’t have to rely as much on credit cards during emergencies.
Pay off high-interest debt
Borrowing costs only get more expensive during a recession, which means paying off your debt sooner rather than later will save you from costly interest charges and allow you to work toward other financial goals.
Open a high-yield savings account
While higher APRs on credit cards are not ideal, high APYs on high-yield savings accounts are beneficial. Take advantage of higher interest rates and find a high-yield savings account to park your money.
The bottom line
The key to sustaining your finances — or possibly even improve them — during a recession is careful planning and the right credit card could help you streamline that plan. Select a credit card with high rewards potential that closely matches your current spending, use it for everyday expenses and pay the balance in full each month to help offset some of a recession’s financial strain.