Can’t pay your credit card bill this month? Here are some options – CNET | Vette Leader

What’s happening

Two-thirds of Americans live paycheck to paycheck, making it harder to pay their bills on time.

Why it matters

Late payments can affect creditworthiness and lead to even greater financial problems.

collect credit card debt is easy, especially if you don’t check your transaction history to see how much you’ve spent – you can find a summary of your spending, balance, and minimum payment owed on your monthly credit card statement or through your online accounts.

your minimum payment is the lowest amount you can pay each month without penalties. If you are financially strapped, it can be difficult to pay the minimum amount required, potentially leading to one missed payment.

According to a Harris Poll survey, 9% of consumers missed at least one credit card payment in 2021. And this year without a covenant Stimulus Checks and child allowance Payments to soften the blow of rampant inflation have seen credit card balances soar.

Meanwhile, credit card interest rates have risen in step with that Those of the Federal Reserve rate hikes. There’s a growing concern that many credit card bills are becoming overdue when borrowers default on payments, Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling, told CNET.

“These credit card users are feeling the effects of interest rates and fees as balances roll over each month, especially during a general price hike,” McClary said.

If you’re struggling to make your credit card payments, we have a few options that can help you stay on your feet while trying to pay your bills. For more, here they are The best credit cards for paying off debt.

Contact your credit card company and explain your situation

As soon as you find that you cannot make your minimum payment, contact your credit card company so they are aware of your situation. If the company is not aware of this, it could assume the worst and take action.

“Give them an opportunity to offer potential solutions and explain how they can benefit you,” McClary said. Informing your credit card provider can help you avoid dire consequences and stay in control of your situation.

Your credit card company may be able to create a payment plan that you can afford. The lender could also push back the due date of your payment to make it work better with your paycheck. You may also be able to negotiate a lower APR – the annual interest you pay on your credit card balance.

“If it’s a situation where a person is facing a temporary hardship that will resolve itself over the course of a few months, there are programs that give people the ability to skip payments without penalty,” McClary said .

Creditors would rather work out a plan with you than sell your debt to collectors. Rod Griffin, senior director of consumer education at Experian, agrees. “Ask her for help,” he said. “They want to be paid as much as you want to pay them.”

The credit card issuer may also have relief or hardship programs (see below) that are less damaging to your credit than a delinquency (an overdue account) or charge on your account. A ‘debited’ account means that it has been written off as a loss and closed to future charges. When this happens, your credit utilization rate increases, which can affect your credit score. It can also decrease your credit history, affecting your credit score.

Whatever you work out, McClary says to make sure you get written confirmation and terms from your credit card issuer in case things don’t go the way you thought they would.

American Express and Chase credit cards

Contact your lender as soon as possible if you are unable to make a payment.

James Martin/CNET

Assess your budget and identify potential opportunities to save money or make more money

If you’re encountering household problems that are making it difficult to pay your bills, consider cutting back on unnecessary monthly expenses and applying for government assistance. There are programs that can give you a grant to pay your energy bills – for example the Low Income Home Energy Assistance Program. States also provide rent assistance, as well as temporary assistance to needy families that helps with food, shelter, household energy, childcare, and job training.

Next, consider resigning streaming services or cable, limit shopping and return unnecessary recent purchases. Try to eat at home more often and eat less at restaurants and specialty coffee shops. If possible, work from home save on gas. You could also use a “pay as you go”. Possibility of car insurance if you don’t drive often These small changes may not be enough to cover your bills depending on how much you owe, but the money you save can still add up in the long run.

Once you’ve determined your savings options, look for additional ways to make more money on the side. Search your storage closet for unwanted items and used electronics and list them for sale on apps like eBay, Mercari, and Poshmark. You could start a side job or sign up as an Uber or Lyft driver. You can also rent out your car tower when you don’t use it.

Transfer your balance to a 0% intro APR credit card

If your credit is still good enough—for example, you haven’t missed any payments yet—you should apply 0% introductory APR credit card and Transfer of your balances. You typically need a credit score of at least 670 to use one of these cards, but switching your credit card debt to a 0% intro APR card can save you time and money when trying to pay off credit card debt.

However, if you are already struggling financially and cannot make your current minimum payment, this may not be the best option for you as you will be expected to continue making payments with your new card during the introductory period. If you don’t do this, your 0% APR period may end early.

If you are unable to approve an introductory 0% APR and have multiple credit card balances, you should submit an application Debt Consolidation Loan. Your debt will continue to earn interest, but you only have one payment to make and could get a lower interest rate overall.

Consider getting credit counseling or a debt management program

Another option for credit card debt help is to look for nonprofit credit agencies or debt management programs that can help with budgeting.

“A debt management program allows you to cost-effectively get back on track within your budget while also benefiting from reduced payments and interest rates until you pay off your accounts,” McClary explained. These programs can help you find a long-term solution with your creditors based on your budget and make payments more sustainable. They can also negotiate with creditors on your behalf to create a new payment plan.

Griffin suggests contacting your attorney general’s office or the Consumer Financial Protection Bureau and checking Consumer.gov for all your local options.

three credit cards stacked

A credit advisor can help find a solution to make payments more sustainable.

Sarah Tew/CNET

How about a hardship program?

Although not often advertised, many creditors offer hardship programs to help you pay off your credit card debt. Terms vary by lender, but may include options like skipping payments or reducing your minimum payment or APR. In general, you must apply for the program by contacting your creditor, but certain conditions may apply. For example, you may need to prove that you are in distress.

However, the programs have a few disadvantages. If you pay off your debt for less than you originally agreed — for example, if your original debt was $15,000 but you settled down to $10,000 — it could affect your credit score because you failed to meet your original obligation. On the other hand, McClary adds that while you’re focused on paying off your credit cards, you should prioritize paying off your debt over your creditworthiness — paying off your debt will have a much larger long-term effect than dealing with isolated credit components .

You need to develop a thick skin about your credit score anyway. Just signing up for a hardship plan could indirectly hurt your credit score, WalletHub analyst Jill Gonzalez told CNET. “Your credit card issuer may add a notice to your credit report that may alert other potential creditors to your financial problems.”

The credit card company could reduce your credit limit or even close your account while you make payments, affecting your credit score. A lower credit limit would affect your credit usage ratio (the sum of your balances compared to your credit limits) – an important part of creditworthiness – as your total used balance will increase.

If your account is later closed, your average credit age (the length of all your accounts divided by the total number of accounts), another component of creditworthiness, goes down. Your credit utilization ratio and length of credit history are two important factors in determining your creditworthiness.

Because of the potential negative consequences of hardship programs, Griffin says it may be best to work through a good assistance program with a financial advisor instead.

More information can be found here how to get out of credit card debt. Also here is What you should know about debt consolidation and how it hurts and helps your credit.

If you want to build your bad credit but need the tools, check out our recommendations for those Best credit cards for bad credit and best credit cards for fair and average credit. Use these cards in conjunction with Best practices to improve your credit score will help isolate your financial situation.

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