How Can I Manage My Credit Card Bills?

With ever increasing inflation and a tough economic climate, it can be a real challenge to pay any bill and that includes any credit card bills that you may have. This is a common problem, people use credit when times are good and when things are bad they struggle to meet their financial obligations. In this article, we will take a closer look at the implications of non-payment and offer some advice on how to get the credit card bills under control.

What Happens if I Don’t Pay My Credit Card Bill?

When the monthly credit card statement arrives, there will be a minimum payment due amount to get the credit card company off your back for another month. If you fail to pay at least this amount by the specified due date, there are financial consequences. The first problem is a late payment fee that’s added to the account and it’s expected to be paid on the next payment. This is usually $30 and so it increases that minimum payment due amount accordingly. There will also be interest charges which will also drive up the credit card account balance. When these fees and charges rise above an agreed limit, even more fees and charges will be applied to the account. In certain cases, the interest rate will be higher and that will apply to all future statements. The long-term consequences are damage to your credit score with a note on your credit report. If a negative pattern of non-payment or late payment behavior continues the credit card company may withdraw services entirely. The credit card will be canceled and if the outstanding debt isn’t paid it will be passed on to a collections agency. 

What Should I Do if I Can’t Pay My Credit Card Bill?

As you can see, there are serious issues that arise if the minimum payment due isn’t paid. So, it’s important to take a proactive approach to the problem if you lack the funds to pay the bill. First, contact the credit card company and inform them that you will catch up soon and make up the shortfall. In many cases, the credit card company will waive the late fees and if you don’t ask you will never know. Next, if your financial circumstances have become uncertain due to a job loss or other unexpected event, you can discuss your options with the credit card company. They may be able to set up a payment plan or an interest freeze to give you a little breathing room. This can help you to catch up with the payments, but there is a caveat: it's likely that the card issuer will prevent you from using the credit card until the shortfall is paid. If you come to an agreement, it’s important to honor it and plan a budget to make the payments on time. This is the best way to bring your credit card account up to date without incurring fees and charges. 

6 tips to Manage Your Credit Card Bills

To get more control over your credit card bills follow these six simple tips: 

1. Work Out How Much You Can Pay

Add up your income and expenses, look for any practical way to cut costs, such as: unused subscription services, the morning coffee run (make your coffee at home) and more. In many cases this will give you some extra cash to make that minimum payment.

2. Call the Credit Card Company

When you’re in contact with the credit card company, clearly explain why you’re having problems paying and tell them how much you can pay. Let them know when they can expect the normal payments to restart and the new payment you’re requesting. At the conclusion of this interaction, both parties should know when this situation is going to be resolved.

3. Contact a Credit Counseling Organization

Credit counseling has helped many manage their money more effectively to get out of debt. Some of these organizations are non-profits which means that you don’t pay any fees to sign up with them. Others are businesses that provide their services for a fee and if you choose this route, you need to know up front what you’re paying for and the services the company provides. 

4. Avoid Debt Relief or Debt Settlement Companies

These entities advertise that they will arrange debt settlement and reduction for a set fee. Many charge an up-front fee to begin debt settlement, but they are legally not allowed to collect a fee before they settle or resolve a debt. Some other warning signs to look out for are that they tell you to stop making minimum payments and avoid communication with the credit card company. An unscrupulous company may even guarantee that they can make all your debts simply disappear which is complete nonsense. Using any of the other methods we’ve detailed in the article are better ways to deal with credit card bill problems. 

5. Keep the Lines of Communication Open

During a financial emergency, it can be easy to forget that you’re dealing with people that are running a business. It’s important to bear in mind that the credit card issuer doesn’t want to send your account to the collections agency. It’s bad for business, they won’t get back the monies owed and they can charge interest on the outstanding debt. So, if you’re prepared to contact them and keep the lines of communication open they are more likely to help you make a plan to repay the outstanding debt. 

6. Make the Payment

As soon as you’re able to make a payment, make it and don’t worry too much about the late fees. Every dollar you can put into the account will reduce future interest charges and demonstrate that you’re prepared to pay at least the minimum amount. By law, any payments you make are applied to the higher interest rate balances first and this includes penalty APR. This is important, most credit cards compound interest daily and lowering the highest interest rate balance should be the priority. Making any regular payments can defer credit card delinquency and serve as an incentive for the credit card issuer to maintain negotiations with you.