What Happens if You Pay Less Than the Minimum on Your Cards?

Make sure you understand the consequences of paying less than the minimum.

If you have a credit card, you are probably aware that you have to pay a certain minimum amount each month. This amount is, perhaps unsurprisingly, referred to as the "minimum payment due."

In an ideal world, you wouldn't just pay the minimums on your cards. You'd repay your balance in full every single month. That way, you could avoid interest charges, which can be very expensive on credit cards. You could also make sure you don't run up such a large balance that you damage your credit score.

We don't always live in an ideal world, though. And there may come a time when you struggle to even pay your minimums. If you're wondering what will happen if you make some type of monthly payment by the due date but not the full amount required, keep reading to find out.

The consequences of not paying the minimum amount due

If you pay less than the minimum amount due on your credit cards, unfortunately your card issuer will still count that payment as a missed payment.

As a result, this could trigger all sorts of consequences including a late payment fee. You could also see your credit score decline if you fall at least 30 days behind on making a payment for the required minimum amount. And, in some cases, your card issuer could freeze your card if you fall far behind.

Making less than the minimum payment also means that you may not cover the credit card interest costs that were due on your debt. The result of this is that your account balance is almost assuredly going to go up instead of down, even after making your minimum payment, since you'll have interest charges plus a late fee tacked onto your balance.

What should you do if you can't make the minimum payment?

It can be really frustrating to try to send a small payment and still end up facing all of these consequences despite your best efforts. But the good news is, you may have other options.

To help keep credit card debt under control, reach out to your credit card issuer as soon as you know that you aren't going to be able to cover the minimum amount due. They may be able to put you on a payment plan or work out some other type of agreement with you.

You may also be able to reduce the interest rate that you're currently paying. To do this, look into applying for one of the following:

• Balance transfer credit card
• Personal loan

These could potentially reduce your monthly payment amounts, which could make it easier to pay your bills.

In some cases, debt settlement could also be an answer. This would involve negotiating with your creditors to pay less than the full amount due and having the remaining balance forgiven. This can damage your credit, though.

Still, it may be better than bankruptcy and a good way to climb out of debt if you're really struggling. Just keep in mind that card issuers are more likely to work with you to settle debt if you're delinquent. So missing a payment entirely rather than wasting money on paying less than the minimum may be your better option in this situation.

Regardless of which approach you choose, by being proactive, you can hopefully avoid ending up with your credit card company reporting a missed payment, which can have a negative impact on your personal finances.