Credit Cards

Can’t Afford Credit Card Payments

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 8 minute read

In the current state of the American economy, credit cards and debt play a significant role, and the dynamic between borrowers and lenders is fascinating.

Consumers appreciate having access to credit and the incentives they receive when they use it, but that love turns to detest when debts balloon and just makes the minimum payments.

You may have found yourself in a bind where you are unable to make the minimal credit card payments and are unsure of what to do because of changes in job, coronavirus shutdowns, and increases in daily expenses.

Don’t be alarmed; things aren’t as awful as you might believe. Here are the things you should know and what you can do next.

What to Do If You Can’t Pay the Minimum Amount on Your Credit Card

When you open a credit card account and see that you can’t make the minimum payment, your financial woes can be alleviated in a number of ways.

1. Don’t Worry; You’re Not Alone

It’s natural to feel overwhelmed by financial obligations when you can’t meet them. It might cause an instant of fear as you consider the consequences of being late or missing a payment, as well as a sinking feeling of slipping hopelessly behind and worrying that things will only grow worse if you can’t afford to pay the minimum.

The silver lining is that you’re not the only one. There are a number of resources for persons in your position. If your finances have gotten off track, there are still things you can do to right the ship.

2. Take Into Account a Credit Card With a Balance Transfer.

If this is the first time you’ve struggled to meet the minimum payment requirements on any of your credit cards, chances are strong that your credit score is still in good standing. A credit card with a low annual percentage rate (APR) for transferring balances should be your first consideration.

Credit cards that specialize in balance transfers, such as the Citi® Double Cash Card, are useful since they do what they say on the tin. Customers can move debt from a high-interest credit card to a new, lower-interest card.

Typically, promotional interest rates on debt transfer credit cards range from 0% to a very low introductory APR (annual percentage rate) and last anywhere from six months to a year and a half.

The steep discount in interest rates offered during these promotions may allow you to make the minimum payments each month and begin reducing the principal balance. After transferring amounts from one card to another, you’ll have anywhere from six to eighteen months to get your financial house in order so that you can make the required minimum payments without going into debt.

3. Speak With Your Credit Card Company

You might not think of your lender as your buddy when you’re struggling to make the monthly minimum payment and are concerned about the impact of late payments on your credit score.

Your lender, however, has an investment in your success. If you go into default or declare bankruptcy, your lender will get nothing back. Therefore, it is to their benefit to provide assistance when you ask for it.

Many credit card companies have created financial hardship programs specifically for cardholders who have found themselves unable to make their minimum payments due to unforeseen circumstances. 

Don’t worry if you can’t get a debt transfer credit card or don’t like the thought of creating a new account; you may be able to work something out with your lender instead.

Don’t avoid calling and explaining that you’re experiencing financial hardship but want to pay off your credit card bill in full as soon as possible. But you can’t afford even the current minimum payment. 

Then, inquire about any payment-reduction plans the financial institution or card issuer might offer to get your minimum payments down to a level you can handle. A credit card company’s willingness to assist you may come as a pleasant surprise.

4. Research Your Debt-Consolidation Options.

It may feel impossible to make your minimum payments if you have a large amount of debt, regardless of how much money you shift to a credit card with a low-interest rate or how much assistance you receive from your lender.

Now is the time to investigate alternate methods of debt management, the most common of which is consolidation. 

Consolidating your revolving credit card debt into a single, more manageable, low-interest loan payment is what we call “debt consolidation.” You can save money and avoid late fees by doing so.

Programs for Debt Consolidation

Companies like Freedom Debt Relief provide debt consolidation plans and negotiate repayment agreements with creditors on your behalf. Debt consolidation firms work on their client’s behalf to negotiate lower interest rates and monthly payments. 

After that, you’ll make only one payment each month to the debt consolidation provider, and they’ll split it up among your several credit card companies according to your debt consolidation plan’s specifications.

The debt consolidation company will essentially become your power of attorney and handle any debt-related matters on your behalf during this time. Debt collectors won’t be able to contact you anymore, and you’ll have an easier time paying off your bills.

The program includes having your credit card accounts terminated and your available credit completely canceled. If you close an account and the credit bureau learns about it, your credit score will go down. 

However, unlike the credit damage associated with persistent missed payments or bankruptcy, this one will be modest and easy to overcome once your debts are repaid.

Loans for Debt Consolidation

Debt consolidation loans are low-interest loans taken out with the specific intent of combining many revolving debts into a single, manageable loan with a reduced monthly payment.

Credit card accounts will remain open while you repay your debt consolidation loan, and you won’t have to give up power of attorney. If you have a hard time resisting the temptation to use your credit cards whenever there are accessible funds, a debt consolidation program may be preferable to a debt consolidation loan in your situation.

5. Think About Debt Consolidation

As the debt settlement process can have a devastating effect on your credit score, it should be used as a last alternative before declaring bankruptcy. But these programs are a terrific choice for people in dire need of aid and have prevented many Americans from filing for bankruptcy.

In order to begin, you must first sign a contract with a debt settlement agency. Instead of basing your monthly payment on your total debt, the company will look at your current financial status to determine what you can reasonably afford to pay.

In order to contact your creditors and inform them that they will not be receiving payments while you save for a settlement, your debt settlement business will need a power of attorney. 

Since your lender is under no obligation to pause payments, and you won’t be providing them with payments on a regular basis, your credit report will reflect that you’re behind on your bills, which will negatively affect your credit score.

However, debt settlement’s consequences on your credit are less severe and less long-lasting than bankruptcy’s, so it may be worthwhile to deal with if you’re out of other options for getting back on your feet.

The debt settlement business will put the money you give them into a savings account until there is enough to pay off the smallest obligation you owe. As soon as this occurs, the debt settlement company contacts the creditor to negotiate a reduced settlement amount, often between 40% and 60% of the account total.

You can put your payments toward your largest debt first, and then use the funds to pay off the second-highest bill, and so on until you’ve paid off all of your debts.

6. Make Constructive Changes for the Future

Once you’ve found a solution to your credit card minimum payment woes, whether it’s increasing your income, reducing your spending, or some combination of these, it’s time to look ahead and make some permanent changes to your lifestyle so that you never have to go through this again. 

Here are some things you can do to improve your financial situation:

  • Reduce Spendings. The process of saving a few pennies every now and then is straightforward and may be done in a variety of ways. Just a few dollars a day adds up to $90 a month, so keep that in mind. If you make your own coffee at home instead of buying it from a coffee shop and pack your own lunch instead of getting takeout, you can save yourself around $100 each month.
  • Pursue a Second Job. You can make some extra cash in your spare time through a wide variety of methods. Do you enjoy photography a lot? Get paid to upload them to stock photo sites. Is computer repair something you’re good at? Post an ad on
  • Craigslist offering your services. Think about what you’re good at and how you could make money doing that. Plenty of opportunities exist to supplement one’s income and make ends meet.
  • Don’t throw out edibles. In the United States, the annual food waste per household is estimated at $1,866, as reported by Futurity. The monthly cost would be $155.50 then. Plan your meals and reduce food waste to help the planet and your wallet.

7. Think About Bankruptcy Only as a Last Option

Although the bankruptcy procedure is not something anyone wants to consider, it exists for a good cause. Inconsistency is a part of life, and it can have both positive and negative effects. Filing for bankruptcy is an alternative for individuals who have run out of money and resources.

You should try to resolve your financial issues in other ways first, before resorting to bankruptcy. After all, filing for bankruptcy requires you to first seek credit counseling, and any reputable credit counselor will recommend the same debt relief strategies.

Bankruptcy, as you might think, has the most devastating effect on your credit and financial future of the options listed below. After bankruptcy is finalized, you may have a hard time obtaining credit for a long period of time.

Bottom Line

It’s discouraging to open your credit card statement and discover that you’ve been assessed a penalty APR because you weren’t able to make your payment on time. 

However, it’s crucial that you don’t freak out. You may find many resources and people that want to assist you to get through this financial crisis; you are not alone. Take advantage of the tools at your disposal and keep your eye on the prize—a debt-free future—as you work diligently to eliminate your financial obligations.

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