Here’s What Happens if You Can’t Pay Your Credit Card Bill

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Take a deep breath and don’t despair. 

It’s been a difficult time for many Americans, as we have all struggled with higher costs due to rampant inflation from mid-2021 to now. Thankfully, prices are starting to come down, as the Consumer Price Index Report from Jan. 12 showed that inflation had fallen to 6.5% from 12 months prior — down from a peak of 9.1% in June 2022. In short, if you’ve been struggling with money and affording higher bills, you’re not alone.

If you’ve been forced to lean harder on your credit cards lately and now find yourself in a position where you can’t afford to make at least your minimum payments, you’re likely beginning to panic. Take a deep breath and read on for the steps you should take to remedy this situation.

1. Go through your finances

First things first. Sit down and run your numbers again to make sure you haven’t overlooked some extra money in your checking or savings account that you could use to pay your credit card bill. It might be useful to sit down with your bank statement from the last month to see how you ended up short on cash to make this payment. Maybe you had a surprise bill and the money you normally would’ve sent to your credit card company went to repair your car instead.

If you are truly tapped, is there a way you can scrounge up some extra money in a hurry? Is there a friend or family member you can ask for a small loan (ensure that you establish how and when you will pay this kind person back for their generosity)? Resist the impulse to take out a payday loan or rely on another form of predatory lending, as you could end up in an even worse situation as a result.

2. Contact your card issuer

If you can’t manage to make at least the minimum payment you owe on your credit card, it’s time to call the card issuer and explain your situation. I promise you, the friendly customer service representative on the other end of the line has definitely heard it all before. And it’s in your card issuer’s best interest to work with you so it can keep you as a customer.

Tell the person you’re speaking with that you’ve come up short, and explain what you need as far as help is concerned. Maybe you need a lower monthly payment, or to be able to skip this month so you can get back on top of your finances. Some credit companies have a hardship program you might be eligible to join. This could offer you the chance to make lower payments or pay less interest until you get back on your feet.

It’s important to reach out to the company before you have missed a payment, though, as this will prevent the credit score damage, late fees, or higher penalty interest rates that come as a result of being delinquent. And since payment history makes up 35% of your FICO® Score, it’s important to keep on top of your payments — you don’t want your credit card company sending the bill to collections.

3. Improve your financial standing for the future

Once you’ve made a plan with your credit card company to pay what you owe, it’s a good idea to take a look at your larger financial standing so you can avoid this problem in the future.

The typical advice when you’re having trouble affording your bills is to cut your nonessential spending to the bone, and while it’s worth looking to see where your money is actually going (and perhaps using a budgeting app to gain greater control of your spending), you could also try increasing your income. I got out from under a pile of debt in 2022 thanks to working more, and I can’t recommend it highly enough.

Having more income also means you can save up a solid emergency fund, so if you end up in a pinch due to an unexpected expense, you won’t end up struggling to afford your credit card bill — or going deeper into debt.

Another thing to consider, especially if you find yourself constantly struggling to get ahead of your creditors, is credit counseling. A nonprofit credit counseling agency will go through your budget and expenses with you and can even help you with a debt management plan, putting you on the road to better financial management in the future. If you’re struggling with credit card payments or other bills, there’s help out there for you. Don’t ignore the problem or pretend it doesn’t exist — it’s best to face it head on.

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