Preparing for a recession? Take advantage of these credit card benefits
Between tariff concerns, inflated prices, and rising debt delinquency rates, you might already be feeling some financial uncertainty.
If and when a recession hits, there may not be much you can do to combat it on an economic level, but you can protect your own wallet. Building an emergency savings fund, sticking to a budget, and getting ahead of high-interest debt balances are all good places to start.
But you can also benefit from having the right credit card to stretch your budget with special financing options, lower interest rates, and added rewards.
Read more: Our picks for the best credit cards right now
Are we in a recession?
Despite increased prices and economic uncertainty, we aren't technically in a recession right now.
A recession is a period of economic decline that lasts for more than a few months, according to the National Bureau of Economic Research, and is both significant and spread throughout the economy.
Though it's not the only indicator, a generally accepted recession marker is at least two consecutive periods of negative economic growth — or contraction. By this measure, the economy contracted by 0.3% in the first quarter of 2025, but before that GDP grew by 2.4% annually in the last quarter of 2024.
So while we aren't officially in a recession right now, there are signs that a downturn could be on the horizon — including rising expectations from experts and economists.
Even if you can't predict when you might begin to feel the effects of an economic downturn, you can still prepare. Here's how credit cards may play a role in helping you stay afloat.
5 ways credit cards can help during a recession
A credit card can help you fight financial hardship in the following ways:
1. Use introductory APRs to tackle debt
Credit cards can have sky-high annual percentage rates (APRs). According to Federal Reserve data, the average APR for cards that assessed interest was 21.91% as of February 2025.
However, some credit cards have special intro APRs, usually offering 0% interest on new purchases or balance transfers for a limited time. These offers give you time to pay down your balance without interest and get out of credit card debt faster, freeing up cash for other goals, such as saving or investing. You can also use an offer like this to make a large purchase and pay it off over time without interest fees.
For example, the Capital One Savor Cash Rewards Credit Card has a 0% APR intro offer for several months after opening on both purchases and balance transfers. After that introductory period expires, the standard APR will apply to any remaining and future balances.
Capital One Savor Cash Rewards Credit Card Learn more
Read more: Capital One Savor Cash Rewards review
But don't wait for a recession to pay down your debt — you can benefit even more by starting now. Balance transfer credit card offers can dry up during periods of economic downturn — credit card companies may lower the length of 0% APR intro periods and tighten lending standards so you'll need a much higher credit score to qualify.
If you already have good credit and can qualify for a balance transfer card to pay down existing debt, you may save more in the long term by choosing a 0% APR offer now.
Read more: Best balance transfer credit cards
2. Take advantage of other low-interest options
Even after intro periods end, some credit cards have special financing options that function like buy now, pay later programs. These typically allow you to split up a large purchase into monthly installments at 0% APR. While you won't pay your card's regular interest rate, you will take on a monthly fee and can face penalties for late or missed payments.
For example, with a card like the Blue Cash Preferred® Card from American Express or Blue Cash Everyday® Card from American Express, you can use Amex's Plan It feature to pay off an eligible purchase over a period lasting up to 12 months.
Here's a look at an example Plan It payment plan for a recent purchase totaling $174. If I were to opt into any of these plans, I would pay more than the original total, but still a lot less than if I were unable to pay the charge off at all and let it accrue interest.
By using these programs, you can take advantage of interest-free financing to make major purchases, such as new appliances, and keep cash free for other necessary expenses. Make sure to read the fine print of any payment plan before you opt in, though. You should know the possible fees and penalties as well as how much you'll pay over the full plan term.
And remember — your credit card shouldn't be your first option when you take on an unexpected expense, even if you do have access to financing options. Start building an emergency fund today so you'll have money saved if your financial situation changes after a layoff or job loss during a recession.
3. Earn cash back, points, or miles rewards
With a rewards credit card, you can save on future purchases when you make routine, monthly expenses, such as your utility bills and groceries. To make the most of these rewards, pay your statement balance in full each month and avoid costly interest charges that could reduce your rewards earnings.
For example, the Chase Freedom Unlimited® card offers a flat 1.5% cash back or more on all purchases. If you spent $1,000 per month with your card, you could earn $180 in cash-back rewards over one year. And when you spend money in the card's bonus rewards categories, you can boost your annual rewards even more.
Read more: Chase Freedom Unlimited vs. Freedom Flex
Taking advantage of credit card rewards helps you get more value for your money. Depending on the type of rewards you earn, you can redeem them toward airfare, hotels, and other travel expenses. But you can also redeem your rewards for deposits to a bank account or statement credits to your card account to help pad your budget.
4. Utilize cardmember portals
If your credit card issuer has a shopping portal or discount page, download the issuer's app or install its extension on your browser to click through and apply discounts or boosted rewards on your purchases. When you already have a purchase planned, these portals can help you stretch your dollars further.
For example, you can use the Shop through Chase portal from Chase Ultimate Rewards to click through and earn extra points with dozens of online retailers, including places you might buy everyday essentials like CVS, Walmart, Verizon, PetSmart, Sam's Club, and more.
Some credit card issuers, including Citi, Chase, and American Express, also have 'offers' with brands for exclusive deals and automatic discounts you can use only after opting in through your card account. These offers are often targeted based on your spending and location, and they do expire, so you can benefit from checking your account regularly.
Read more: Amex points vs. Chase points — Which is the better rewards program?
5. Find a lucrative welcome bonus offer
If you're shopping for a new credit card, you may benefit from welcome offers offered only to new cardholders. These special offers give you bonus cash back, airline miles, or points if you meet your new card's spending requirement within the specified time period.
Read more: The best credit card sign-up bonuses
If you open a Capital One Quicksilver Cash Rewards Credit Card, for instance, you can earn a $200 cash welcome bonus if you spend $500 or more on new purchases within the first three months.
Capital One Quicksilver Cash Rewards Credit Card Learn more
Read more: Capital One Quicksilver review
Welcome bonuses can typically be redeemed for cash back, gift cards, travel, and more. Just be sure you can comfortably meet the minimum spending requirement before you apply. If you have to go into debt to earn the bonus, you could end up in a worse spot than where you started.
You should also make sure the credit card you choose works for your spending long term — aside from its great bonus. Otherwise, the card could end up costing you more than its value is worth (especially if it has an annual fee), and you may forfeit the rewards earnings you would have gotten with a better card for your budget.
Tips for using your credit card
Although credit cards can be useful tools during a recession, they can also become costly. Here's how to avoid interest, fees, and other costs so you're able to fully maximize your credit card benefits.
1. Pay off the balance in full every month
To maximize any credit card's value, you must avoid paying interest charges. Aim to pay off your statement balance in full each month by the bill due date so you can earn rewards without paying high interest fees.
Track your spending so you know exactly how much you're putting on your card each month. It's smart to use your credit card like a debit card and only spend what you know you have in the bank so you can pay it off when your balance is due.
Read more: What happens if I only pay the minimum payment on my credit card?
2. Keep track of rewards categories
Although there are several cash-back credit cards with a flat rewards rate, some of the best cards have staggered or rotating rewards categories with higher reward rates on certain expenses, such as groceries, subscriptions, or dining out.
If you have multiple cards, make sure you know which cards earn the highest reward rates in your frequent spending categories. You might use one card for 3% on your weekly grocery haul and filling up at the gas station, for example, while you have another card with 2% flat rewards on all other non-bonus category spending.
Some people find it helpful to manually track their credit card reward categories on their phones, but you can also use apps such as AwardWallet or MaxRewards to manage your cards.
3. Stick to a budget
Credit cards can help you save money and earn rewards on planned purchases and regular spending. But use caution. Credit cards can also make it easy to spend more than you intended, and if you carry a balance, the interest charges you'll pay will only add to any financial hardships you may take on in a recession.
Create a budget and track your spending to ensure you stay within your means. Then, you can pay your balances in full each time you make a monthly payment to avoid unnecessary interest charges.
You don't have to DIY a budget spreadsheet to get started — consider using a common method like the 50/30/20 rule or budgeting apps and online tools to help you manage your finances.
This article was edited by Alicia Hahn.
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
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