Most of us have been there one time or another – an emergency cleans out your bank account, or you encounter a brief period of financial stress or maybe you just spent too much one month.
If this temporary setback prevents you from making your monthly credit card payments, the last thing you should do is simply let the bill go unpaid. The credit card company can take any of a number of actions; they can charge you a late fee, they can raise your interest rate and they can report these actions to credit bureaus that could negatively affect your credit score.
What you do is call the financial institution or store that issued your credit card and explain to them that this is a single occurrence and tell them when you will be making your payment. Frequently, companies will change your due date, waive the late fee and report you as “current” to the credit bureaus.
Not every creditor will be helpful. If this occurs, see if you squeeze the minimum payment from somewhere else in your budget – perhaps you can spend less on entertainment or clothing. If not, maybe a family member or friend can help or you can get a small advance on from work against your next paycheck.
Caution is the watchword if you put off paying other monthly bills, as there can be very unpleasant consequences. If you fail to pay the electric bill, your service could be turned off.
Do not get a payday loan – usually they lead to an ever-increasing spiral of debt at extraordinarily high interest rates.
If you find that each month you have difficulty paying more than your minimum payments, you may want to see a credit counselor. Together you can figure out a new budget or work with your creditors to lower your monthly payments.
To avoid late fees and other penalties you must either pay your credit card’s minimum balance due or contact them to make other arrangements. A partial payment is not good enough to protect you from fees and interest rate hikes.
Keeping your creditors advised of why your payment will be late and when you will make it often receives a sympathetic ear, and additional fees and negative actions are prevented. However, the creditor is under no obligation to do this and usually only extends this type of courtesy once. Do everything in your power to pay your bills on time in order to preserve a good credit rating.