What To Do If You Can’t Pay Your Credit Card Bill – Forbes Advisor

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Ideally, you’ll pay your credit card bill in full and on time every month — it’s the best way to avoid accruing interest and fees. Life doesn’t always work out like that, though. Emergencies happen and unexpected expenses creep up. Sometimes things get busy and we simply forget. If you can’t pay your card, don’t freak out. Like anything in life, this too can be managed before it’s a worst case scenario.

Another thing to keep in mind is that you have more options if you take action before your due date hits. The sooner you act, the more likely you are to handle it without major complications or penalties. Tackle things head on instead of running away. Here’s our advice on how to handle a credit card payment you can’t make, whether you know in advance or not.

Find The Best Credit Cards For 2022

No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

What To Do Before Your Credit Card Due Date

Double Check Your Personal Budget

Though the optimum scenario is paying your bill in full, an acceptable scenario is hitting the minimum payment. Most credit cards require payment of 1% to 3% of your total balance, often with a flat-rate minimum like $ 25 for smaller bills. On a $ 1,000 balance, a 3% minimum payment would be a more manageable $ 30.

Paying 3% might not sound worthwhile but it actually makes a world of difference. You’ll still have to pay interest charges on your unpaid balance but you’ll avoid also being charged a late fee. It can also help you avoid a penalty APR, which is when the card issuer increases your interest rate to a higher percentage. Making minimum payments also helps you avoid damage to your credit score: payment history is a significant part of calculations.

Since you usually have about three weeks between when your credit card statement closes and when the bill is due, use that grace period to look for ways to scrape together the minimum payment. Maybe you can lower expenses in one part of your life temporarily or pick up extra hours at work. Selling items you don’t use anyway or doing odd jobs for a neighbor are other ways to creatively make ends meet.

Consider Applying for a 0% APR Credit Card

If one-time expenses come up that you need extra time to pay off, a credit card with 0% introductory APR might be able to help. These cards don’t accrue interest for a set amount of time, often for 12 months or longer, which gives you time to chip away at the expense.

Cards with 0% APR can come in two different forms, some offering an interest-free period for new purchases while others focus on balance transfers. When you perform a balance transfer, you’re essentially paying off one credit card with a new one. Most cards have a fee for this — think 3-5% —but that might save you a year’s worth of interest charges at 20%.

It’s important to remember that interest will begin to accrue when your 0% APR period ends if you haven’t paid off the balance yet, so you still need to make payments regularly. Be sure to add these payments into your budget instead of assuming you’ll figure it out in the future and repeating the cycle.

If your credit is already in rough shape, being approved for a new credit card probably isn’t an option. However, if you recently hit a rough patch and your credit score is otherwise respectable, choosing one of the best 0% APR credit cards might be a good way to help get yourself back on track.

Call Your Card Issuer

You might feel embarrassed, but try not to be — calling your card issuer is another important option at your disposal. If you have a history of making payments on time and expect your personal situation to improve soon, it might be enough to call up and ask for a one-time late fee waiver. For small, one-time requests, many customer service representatives are empowered to help.

On the other hand, if you expect ongoing challenges, you might need to ask about joining a potential hardship program instead. With a credit card hardship program, you’ll work with the card issuer to lower your interest rate or waive fees on an ongoing basis until you get back on your feet. That can help you out tremendously, but not without trade-offs. In exchange for the assistance, they may reduce your credit limit or freeze your account from new charges entirely.

Another potential source of help is requesting to change your due date on future billing cycles. Some card issuers will let you select your preferred due date online while others require a quick call. This probably won’t help you for this particular billing cycle but can set you up for success going forward. For example, if you normally get paid on the 15th of every month, you may prefer a due date on the 16th or 17th instead of the 14th.

What To Do If You Miss a Payment on Your Credit Card

Call Your Card Issuer

Yes, calling your card issuer can help even if you’ve already missed your payment. It might not be too late to have fees waived or to ask them to hold off on reporting your missed payment to credit bureaus as a one time courtesy. By calling, you’re also showing willingness to take responsibility for your debt. That may lead to additional leniency as you work out a payment plan down the line.

Banks prefer to work something out directly instead of sending your account to a collections agency. This is also better for you and salvaging your credit score, so be sure to remain in communication with your card issuer no matter the situation.

Make a Payment As Soon As Possible

Making a payment after the due date won’t help you avoid late fees but it still helps. Every dollar you pay reduces your interest charges. If you’re able to pay more than the minimum payment, it will have an even bigger impact: as required by law, payments are always applied to balances at the highest interest rate first, such as those associated with a penalty APR. It also matters because many cards compound interest daily.

Making payments of any size also helps keep you out of full credit card delinquency and can keep negotiations with your card issuer on the table.

Create a Debt Management Plan

The faster you pay off your credit card balance, the easier it will be. Since credit card interest rates are high, balances can quickly spiral out of control making it even more difficult to pay down entirely.

Re-evaluating your budget and using payment calculators can help you understand how long it will take to pay off a debt based on how much you can realistically afford on a regular basis. It’s possible that in order to pay things off you’ll need to make tough lifestyle changes or work with a credit counselor until you get back on your feet. Other times, slow and steady progress will be enough.

Until then, you’ll want to avoid making new purchases with your credit card: that only adds fuel to the fire. Making purchases with cash or a debit card means you won’t accidentally overspend and find yourself in this situation all over again.

Find The Best Credit Cards For 2022

No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

Bottom Line

Missing a payment on your credit card should be avoided but you can bounce back without ruining your credit or budget as long as you face it as soon as possible. Many card issuers are willing to negotiate and customize a payment plan that will work for you. You may even be able to avoid the situation entirely by considering options before there’s a real problem. Although mistakes happen, it’s the recovery that counts.

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