I Can't Pay My Credit Card: What to Do This Week

If you can't pay your credit card this month, call your card issuer before the due date and ask what it can do. Many issuers will lower your payment or interest for a while if you explain what's happening. Then pay whatever you can, and get the account current within 30 days if at all possible: that's when a late payment usually reaches your credit reports.

One missed payment costs you a late fee and some interest. It's the second and third missed payments that do the real damage, so the next few weeks matter more than this one bill.

What happens if you miss a credit card payment?

Here's the usual timeline, counted from the due date you missed:

• The day after the due date: you're charged a late fee. Your card agreement lists the amount, and federal rules say it can't be more than the minimum payment you missed. Interest keeps adding up on the balance. You may also lose a promotional rate, depending on your card's terms.
• 30 days late: the issuer usually reports the late payment to the credit bureaus. This is the point where your credit score takes a hit, and the late payment stays on your report for seven years from when the account first went past due.
• 60 days late: the issuer can apply a penalty rate to your whole existing balance, not just new purchases. If it does, the CFPB says it must restore your old rate once you make six on-time minimum payments in a row.
• 90 to 150 days late: each month is reported as a new, more serious late payment. Collection calls and letters pick up, and the issuer may close or freeze the card.
• About 180 days late: the issuer usually charges off the account. That's an accounting step: you still owe the money, and the debt is often sold to a collection agency.
• After that: a collector, or the issuer, can sue you for the balance. If it wins and you don't respond, it can ask the court to garnish your wages.

The good news is in the first line: if you pay before 30 days are up, it usually never reaches your credit reports.

What to do this week

1. Call your card issuer before the due date, or as soon as you can if it has passed. Use the number on the back of your card and ask for the hardship or payment assistance team. The CFPB says many card companies will change your payment if you're facing a financial emergency.
2. Pay something, even if it isn't the full minimum. A partial payment won't stop the late fee, but it keeps the balance from growing as fast and shows the issuer you're trying.
3. Keep your essentials paid first: rent or mortgage, utilities, food, and the car you need for work. A missed card payment hurts your credit; a missed rent payment can cost you your home.
4. Don't borrow your way out. Payday loans and card cash advances cost far more than the late fee you're trying to avoid.
5. Ignore anyone promising to make the debt go away. The CFPB warns against companies that guarantee results, tell you to stop talking to your card issuer, or tell you to stop making minimum payments.

What to say when you call

You don't need a script, but it helps to have these ready before you dial:

• Why you can't pay: a job loss, a cut in hours, a medical bill, a divorce. One sentence is enough.
• What you can pay: a real number you know you can keep up, such as "$50 a month."
• For how long: when you expect things to get back to normal, such as "three months, until I start my new job."

Then ask:

• "Do you have a hardship program, and what does it change: my payment, my interest rate, or both?"
• "Can you waive this month's late fee?"
• "Will this be reported to the credit bureaus, and will my card be closed or frozen while I'm on it?"
• "Can you send me the terms in writing?"

Write down the date, the name of the person you spoke to, and what they agreed. Hardship programs are temporary, and some issuers close or freeze the card while you're on one, so ask before you agree.

If you're already 30 or more days behind

The late payment is probably already on your credit reports. That's done, but you can still stop it getting worse:

• Get current as fast as you can. Each extra month late is reported again, and 60 days opens the door to a penalty rate on your whole balance.
• Ask about re-aging. Some issuers will bring the account back to current after a few on-time payments, sometimes as part of a hardship plan.
• Talk to a nonprofit credit counselor. The first session is usually free. If you're behind on several cards, a debt management plan can roll them into one lower payment, often at a much lower interest rate.
• Check what else is possible. If your credit is still in fair shape, a balance transfer card or a debt consolidation loan can lower your interest. If you're already behind, approval is harder and rates are higher, so only take one if it beats what you pay now.

If the account is charged off or with a collector

A charge-off doesn't erase the debt. If it's been sold, you'll start hearing from a collection agency instead of your card issuer.

• Ask the collector to validate the debt. It has to send you details of what it says you owe, and if you dispute in writing within 30 days of that notice, it must stop collecting until it verifies the debt. Our guide to disputing a collection walks through it.
• Check how old the debt is. Most states have a statute of limitations of three to six years on debts. After that, a collector can't sue you. Be careful: in some states, a small payment or admitting you owe an old debt can restart the clock.
• Never ignore a lawsuit. If you're served with court papers, respond by the deadline on them, even if you think you don't owe the money. If you don't, the collector usually wins by default.
• Know the limits on garnishment. For ordinary debts like credit cards, federal law caps wage garnishment at 25% of your disposable earnings, and less if you earn close to the minimum wage. Some states protect more.

How much will this hurt your credit?

It depends on what's on your report now, so nobody can give you an honest number. What's certain:

• A payment that's less than 30 days late usually isn't reported at all.
• Once reported, a late payment stays for seven years, but it counts for less as it gets older, especially once you have a run of on-time payments after it.
• A charge-off or a collection account stays for seven years from when you first fell behind.

If your score has already taken a hit, the 30-Day Credit Plan lays out what to do first to start rebuilding.

Where to go from here

If this is a one-month problem, the call to your card issuer and a catch-up payment are probably all you need. If it's going to last longer, or you're behind on more than one card, look at the bigger picture now, while you still have options.

The Debt Options Check asks for a few rough numbers, including whether you're behind on payments, and shows which options fit, from a payment plan to settlement or bankruptcy, with what each one costs. There's no sign-up, and nobody will call you.

Sources

• What should I do if I can't pay my credit card bills?, CFPB
• When can my credit card company increase my interest rate?, CFPB
• Can debt collectors collect a debt that's several years old?, CFPB
• Limits on credit card penalty fees, 12 CFR 1026.52, CFPB (Regulation Z)
• When Do Late Payments Get Reported?, Experian
• What Is a Charge-Off?, Experian
• Debt collection FAQs, FTC (validation notices and disputes)
• Fact Sheet #30: Wage garnishment protections, U.S. Department of Labor