Can't Make All Your Credit Card Payments? Here's What to Do

Man using a laptop and holding a credit card.

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Take swift action to avoid serious consequences.

Thanks to COVID-19 and the resulting recession, many Americans have found themselves faced with a difficult situation: They can't pay their credit card bills.

If you're one of them, you have a few options, but act swiftly -- preferably before you miss a payment. Here are some of the steps you can take.

1. Transfer the balances

One of the best options when you can't make the bills is to lower your monthly payments so they become affordable. Using a balance transfer card might help. A balance transfer card allows you to transfer the balances from multiple credit cards to just one -- ideally, with a 0% promotional APR.

You can transfer balances from multiple credit cards -- provided you don't exceed your balance transfer limit -- so you end up with just one minimum payment instead of many. And with the 0% promotional interest rate, your entire payment can go toward principal instead of interest so your debt will be paid down faster.

Just be aware that some balance transfer cards come with fees that will increase the amount you owe. And if you don't pay off your balance before a promotional period ends, your interest rate could rise again. If you expect to get back on your feet and make larger payments soon, this may not be a problem for you.

2. Get a debt consolidation loan

A debt consolidation loan is another way to reduce your monthly payments by combining multiple debts into one.

You can use a personal loan to consolidate debt, or you can secure a cash-out mortgage refinance loan or home equity loan and use the proceeds to pay down debt -- although this latter option is risky because you're converting unsecured credit card debt to secured debt, putting your home on the line.

A debt consolidation loan can be used to repay some or all of your cards, depending on how large a loan you qualify for. You'll have a fixed monthly payment (assuming you secure a fixed-rate loan) and will know exactly how much your loan will cost and how long it will take to repay. If you're struggling to make the bills and need the lowest possible monthly payment, you may want a loan with a longer repayment term, even though stretching out the payoff time means paying more in interest.

3. Search out extra cash

If you can't qualify for a balance transfer or debt consolidation loan that lowers your monthly payments to an affordable level, you should take any reasonable steps you can to make at least the minimum payment on your credit cards to avoid damaging your credit score.

There are still safe side gig options during the COVID-19 pandemic, so you may be able to find extra work to help you through. Look for cuts you can make to your budget and, if you're out of work right now, consider whether you can apply for SNAP benefits or Medicaid. If you qualify and can lower your grocery or insurance costs, you may be able to free up enough money to pay your credit cards.

4. Reach out to your creditors

Finally, if you can't find any other solution, you should let your creditors know you can't pay the bills and try to work out a payment plan with a lower monthly payment, or even put your loans into forbearance and temporarily stop making payments.

In many cases, creditors will work out an agreement so you can avoid damage to your credit while paying off your bills more slowly, or at a later date. This isn't always the case, though, so be sure to ask your creditors what they'll report to the credit agencies if you enter into a modified payment agreement.

Most creditors understand that coronavirus has caused economic havoc, so they may be much more willing to work with you than under normal circumstances. But you should act ASAP, before you become delinquent on your payments, because it can be harder to undo the damage to your credit -- and to erase any late payment penalties -- than it is to just avoid it in the first place.

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Our Research Expert