Home > Credit 101 > Feeling Jittery? Some Credit Advice for any Disaster

Comments 0 Comments

We don’t know about you, but something in the air is making us jumpy. Maybe it’s the combination of earthquakes and hurricanes on the East Coast with wildfires in Texas, or the blackout in Southern California. These days, we’re getting lots of inquiries lately about how consumers can prepare their finances and credit for disaster, both natural and manmade.

So we’ve culled our archives, talked to our experts, and assembled all of our best disaster preparation advice in one place. We’ll put their advice in roughly chronological order, starting with what you can do now, before an emergency strikes, all the way through the steps you should take after the immediate crisis has passed.

To Do Now: Build a Strong Foundation

Go ahead and dig a bunker in your backyard. If you’re really serious about preparing for a big-time disaster, buy a room inside a luxury hotel for the post-apocalypse.

But not all disaster preparedness is so dramatic. Here are some pragmatic things you can do to get ready with just a telephone and a photocopier, and nevermind the shovel.

Take care of basics: Pay down your debt, and build up your cash reserves. What’s good advice in normal times is even better advice in a crisis. Even if your house is carried away by hurricane wind or flood waters, your credit card bill will arrive t the end of the month, just like always.

As Jean Chatzky counsels people participating in her Debt Diet Challenge, having even a few months’ savings in the bank could make it a lot easier to cope with an emergency.

“(I)t’s not enough to be debt-free,” Chatzky writes. “Having savings, an emergency cushion, a secret stash, whatever you want to call it, is like an insurance policy against incurring debt in the future.”

And keeping some room under your credit card limit could come in especially handy during an emergency, when unexpected expenses like hotel rooms could wrack up fast.

“If there’s no room on your cards for expenses, then you’ve got a big problem, especially if you can’t get access to an ATM for cash,” says Beverly Harzog, Credit.com’s credit card expert.

[Related Article: The Debt Diet Challenge Week #3: Expect the Unexpected]

Make sure you’re insured. Insurance premiums may seem like a burden. But after disaster strikes, you can’t get insurance retroactively. Make sure your car is insured, as well as your house or apartment.

Make copies. According to Harzog, it’s important to make photocopies of all your important financial information.

For each credit card, write down the card’s name, number, the toll-free number on the back, as well as payments that draw automatically from the card, like maybe a health club membership. Take down similar information on bank accounts, as well as your lease or mortgage, insurance policies, car loan, student loans.

You get the picture. If you an established financial relationship with any company, write it down, and keep it handy, maybe in a sealed plastic file folder. If you have to evacuate your house for any reason, you can grab the folder on your way out.

[Related Article: A Credit Card Checklist for Natural Disasters]

During the Crisis: Don’t Lose Your Head

If you’ve prepared well, you can focus on what matters most: Keeping yourself and your family safe. After that, be sure to:

Pay cash, if you can. As Chatzky points out, it’s easy to throw caution to the wind during an emergency, and start charging everything to credit cards. But that just compounds the crisis, since it means paying interest down the road. “If you have the cash to pay for it, you don’t have to go into hock to do it,” Chatzky says.

Pay your bills as normal. If mail service is disrupted, and if you have a working phone, call your credit card companies, mortgage servicer and others to find out how much you owe, as well as the due date. Most companies will let you make payments over the phone, sometimes for a small fee.

Call your bank. Credit card issuers monitor accounts closely to look for abnormal spending behavior, Harzog says. If you suddenly show up in a different state buying things like giant tarps and expensive generators, your bank might question or even block the purchases. Call them to let them know your situation.

Log off. If you’re using computers at libraries or coffee shops to check your accounts, make sure to log off before leaving, Harzog says.

[Featured Product: Research and Compare Secured Credit Card Offers on Credit.com]

After the Crisis: Stay on the Ball

Especially after a natural disaster, the physical damage may be spread across a wide area. As we covered after Hurricane Irene, it’s important to start your recovery quickly, since insurance companies and other service providers will quickly be deluged by people seeking help.

Here’s a more detailed list of things to do with your insurance after an emergency. Some highlights:

  • Inventory your possessions, so you know what to claim. Back up your claim by hiring a private appraiser.
  • File quickly, since insurance companies resolve claims on a first-come, first-serve basis.
  • Keep good records. Write down descriptions of every interaction with your insurer. Also, keep all your emergency-related receipts, like restaurants and motel rooms, since you may be able to get reimbursed.

[Resource: Get your free Credit Report Card]

Image: Theo R, via Flickr.com

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team