While the consequences for missed credit card payments can vary depending on the card issuer, generally, if you don’t pay your bill, your credit score will suffer and you’ll incur late fees and a higher penalty interest rate. In some instances, your account may be closed. That’s why it’s vital to take action whenever you realize you cannot pay your credit card bill.
Don’t ignore the problem. Call your credit card company if you believe you’re unable to pay the minimum payment on your credit card. Many creditors may be willing to help if you’re facing a financial emergency.
Steps to take
1. Add up your income and expenses
Look for ways to cut costs. If you can’t find enough to pay your minimum payment, decide how much you can afford to pay.
2. Call your credit card company
Be sure to explain clearly:
Why you can’t pay the minimum
How much you can afford to pay
When you could restart your regular payments
3. Consider credit counseling
If you need more help, non-profit credit counseling organizations can teach you more about handling your money.
No easy fixes
Some for-profit debt relief companies say they can pay off your debts “for pennies on the dollar.” But many times, these promises don’t measure up. Watch out for any debt-relief organization that:
Charges fees before it settles your debt
Guarantees it can make your unsecured debt go away
Tells you to stop communicating with creditors
Before signing up for credit counseling, ask if you will be charged, how much and what services will be provided. Be sure your credit counselor takes the time to learn about your financial situation and offers to help you learn how you can make it better.
Source: Consumer Financial Protection Bureau: www.pueblo.gpo.gov