The best defense is a good offense.
No matter how organized and on top of your budget you are, sometimes life happens. Next thing you know, you're nine months into a global pandemic and in danger of falling behind on your credit card payments.
It's hard enough being a week or two behind. You may face late payment fees or even an interest rate hike. But if you wind up more than 30 days past due, you'll find yourself in credit damage territory. And the damage to your credit score from a delinquent payment can take years to fall off your credit report.
Late payments can feel inevitable when funds are running low, but don't give up. There may be ways you can avoid both late fees and potential credit score problems.
Making the minimum payment can buy you time
If you normally pay your credit card balance in full every month, the first thing to remember is that you don't have to. Of course, it's good practice because paying your full balance before your due date means you won't be charged interest fees on your purchases.
But, so far as your credit card issuer is concerned, you're only required to make the minimum payment. As long as you pay the minimum before your due date, your account will stay in good standing.
The tricky part here is that paying only the minimum isn't sustainable in the long term. Interest fees will stack up on top of your original balance and increase your overall debt. And as your balance rises, so will your minimum payments.
A call to your issuer can help prevent disaster
You can get by with minimum payments for a few months, but it's not ideal. And you may suddenly find you can't make even your minimums.
The moment you realize you won't be able to cover your payments -- i.e., before you fall behind -- it's time to contact your issuer. Turn your card over and call the customer service number on the back. Or, depending on your issuer, log into your online account to start a secured chat or fill out the appropriate form.
As much as credit card companies might enjoy collecting late fees, they don't actually want you to default on your account. Collecting on defaulted accounts is time-consuming and expensive. Even before the pandemic, credit card issuers offered various forms of assistance to help customers going through tough times. These days consist of near-universal hard times, so issuers know many folks are going to be in need of a little help.
Once you're in contact with customer service, request payment assistance. The type of assistance you're offered will vary based on a number of factors, such as the card, issuer, and your specific credit history. Common forms of payment assistance include late fee waivers and minimum payment deferrals. In some cases, your issuer may help you set up a payment plan, and you could even qualify for an interest rate reduction.
There are no miracle cures. But if you work with your issuer before your account becomes overdue, you could protect your credit from the damage done by late payments. And even a few months may help you financially regroup; it can be enough time to find a new job, reorganize your budget, or take out a consolidation loan, just to name a few options.
No matter what kind of assistance your issuer offers, make sure you understand the terms and conditions. For example, your issuer may agree to defer your payments for a couple of months, but you may still accrue interest during that time. The issuer may also put conditions on the assistance, such as freezing your account or lowering your credit limit.
Asking for help isn't failure
Whatever the antiquated by-the-bootstraps philosophy might have you believe, we all need help sometimes. Some folks get help from family and friends -- others need to ask for it from a faceless credit card corporation. Wherever you get it, see it for what it is: help. It isn't a failure or a lack of hard work, it's simply human.
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