Unemployment claims jump unexpectedly: What to do if you need cash now

The number of Americans who filed for unemployment for the first time rose to 412,000 for the week ending June 12, according to the U.S. Department of Labor — a much higher number than Dow Jones economists predicted. Initial jobless claims are at their highest level in a month and well above the four-week moving average of 395,000. 

These unexpectedly high unemployment applications come at a time when there's a nationwide labor shortage, with many businesses struggling to fill positions. Some economists speculate that the extra $300 in unemployment benefits offered due to the coronavirus pandemic have discouraged people from returning to work. More than half of the states have planned to cut off the extra federal benefits before the Sept. 6 expiration date in order to lure Americans back into the workforce. 

Although some indicators signal that the economy is returning to a pre-pandemic normal, many Americans are still struggling to make ends meet with rising consumer prices and low wages. 

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What to do if you need cash now

You could consider making quick cash by selling unused items online or joining a rideshare service like Uber, but these methods tend to require a lot of work for little payoff. Alternatively, consider the following options if you need money now:

1. Borrow a low-interest rate loan
2. Consolidate credit card debt
3. Refinance student loans

If you need money to get by, consider refinancing your existing debt or shopping for personal loans to free up some cash in your budget. You might even pay less in interest in the long run. You can shop around for the lowest interest rate on a variety of financial products like these on Credible's online marketplace.

Borrow a loan with a low interest rate

There are a variety of secured lending options, such as 401(k) loans that let you borrow from your retirement fund or home equity loans that let you borrow from the money you've invested in your house. However, not everyone has access to secured funds like these.

Consider borrowing a personal loan, which is an unsecured loan that doesn't require you to put up an asset as collateral. Personal loan interest rates can range from about 4% to 36%, and the lowest rates are reserved for borrowers with good credit — defined as a credit score of 670 or higher using the FICO scoring model.

The best way to get a low interest rate on a personal loan is to shop around and compare offers. You can get prequalified through multiple lenders at once without affecting your credit score using Credible's marketplace. 

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Consolidate credit card debt to lower your monthly payments

High-interest credit card debt can eat away at your budget and make it harder to pay other bills like a mortgage or auto loan. You may be able to lower your monthly payments and save money on interest by paying off your credit card debt with a personal loan. 

For example, let's say you have $8,000 in credit card debt with a 15.91% interest rate, the current average rate, according to the Federal Reserve. Your monthly payment would be $320. If you took out a five-year personal loan for the same amount at the average interest rate of 9.46%, you could lower your monthly payment to $168.

Use Credible's personal loan calculator to see how much you could save on your monthly payments with a personal loan. 

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Refinance your private student loans

Did you take out private student loans to supplement your federal student loans? You may be able to qualify for a lower interest rate on your private student loan debt, since interest rates are at historic lows. Keep in mind that refinancing federal student loans is inadvisable, since you'd lose federal protections like an income-driven repayment plan or forbearance. 

With a lower private student loan interest rate, you can lower your monthly payments and save money on interest in the long run. Shop around for student loan refinancing rates on Credible to make sure you're getting the lowest interest rate for your unique situation. 

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.