Dealing with Missing a Credit Card Payment

According to a July 2020 poll by Creditcards.com, 62% of those with credit card debt surveyed said they didn’t think they’d be able to make their minimum payment within three months because of the coronavirus pandemic. And even before the pandemic was in full swing in the U.S., a WalletHub survey revealed that 46 million Americans expected to miss at least one or more credit card payments in 2020.

Missing a credit card payment, whether it’s because of your economic circumstances or simply because you forgot to make it, can be stressful. Not only might you be subject to fees and penalties and accumulate interest charges, it could also adversely affect your credit. In fact, a single missed payment could lower your credit score by 100 points.

But a missed payment isn’t the end of the world, and there are steps you can take that could help minimize any damage caused by being past due. Here are a few suggestions.

1. Stay Calm

For many Americans, money is the number-one cause of stress. So being stressed out over not being able to make your credit card payment is only natural. But it’s probably not going to help things. Try to stay calm, take a deep breath, and accept your situation. Once you accept your situation, then you can start doing something about it. And you’re going to want to be calm, cool, and collected for the next few suggestions.

2. Do the Math

If you can’t make your credit card payment, that means things aren’t adding up financially. Either you’re spending too much or your income isn’t enough to cover what you’re spending. If your income is steady and you can no longer make your credit card payments, then you may be overspending and need to cut back. If you’re spending about the same but can no longer make your payments because you’ve lost a job or been laid off, then it’s probably an income issue.

Either way, to get out of your situation, you’re going to have to make some adjustments. But it can be difficult to formulate a plan without first putting things down on paper to see exactly what you’re spending and exactly what you’re bringing in. If that’s your case, it’s time to make a budget.

There are multiple ways to make a budget, but it’s crucial that you do so to formulate a plan on what you’re going to cut back on—or how you’re going to bring in more income—in order to get current on your credit card account. And you’re going to want to have a plan before you take the next step.

4. Contact Your Credit Card Company

No, this is not a numerical sequencing error. You’re technically going to want to do Step 3 (below) before you contact your credit card company. But it’ll be clearer to first explain why it’s important to contact your credit card company. Simply put, it’s important because effective communication could play a big role in helping you to get out ahead of your problem and in convincing your credit card company to work with you.

If you’re already behind on your payments, it’s usually a good idea to call your credit card company and talk to somebody to explain your situation and why your payment or payments are late. But, if you know you’re about to miss a payment, it may also behoove you to be proactive and give your credit card company a call before the payment due date comes and goes.

Not communicating with your credit card company really does you no favors because it’s not like they’re going to turn a blind eye to you being past due. Credit card companies are in the business of making money, and they don’t make money by not doing their due diligence to collect debts owed to them by cardholders. By reaching out to your credit card company, you’re demonstrating good faith and a willingness to work with them, which could buy you time, inspire the company to make temporary payment arrangements, convince them to waive late fees and/or interest, or even, in some cases, persuade them not to report your account as past due.

Of course, “could” is the operative word in all of the above scenarios. It all depends on your situation, the credit card company and its policies, and could even come down to temperament and personality of the person you speak with on the other line. But contacting your credit card issuer does, at the very least, demonstrate a willingness to own your situation, which can only help your chances of convincing them to work with you to help you get out of it.

Believe it or not, your credit card company does not want you to fail and your account to be written off and sold to a collection agency. They want to fully or partially recoup any amount you owe them and would prefer that you bring your account current and hopefully stay a card member who pays them on time every time for many years to come.

Credit card companies are typically also in tune with what’s going on economically so, for example, if your financial situation is a result of the economic impacts of the coronavirus pandemic, your card issuer is most likely aware that times are tough and may be more willing to work something out with you. Even if your situation is deeply personal, relating it to a representative on the other end of the line could result in a connection and an empathetic response from that person that makes them genuinely want to help you. Credit card company customer service agents may represent the company, but they’re first and foremost human beings. And people generally like to help other people when they can.

So, reach out to your credit card issuer, but before you call, first take a few moments to do Step #3 below.

3. Think About What You’re Going to Say

What you explain to the credit card company and how you say it can both play a role in convincing your credit card issuer to work with you. So, take a few moments to rehearse what you’re going to say and then calmly cover those points with a credit card company representative—doing your best not to get upset, angry, or overly emotional. Topics to discuss may include but are not limited to:

• A description of your circumstances. Cover why you’re unable to make your payment and any pertinent circumstances, such as losing your job, going through a divorce, etc. Keep it brief and don’t overwhelm the representative with details. But paint a clear picture of what’s preventing you from making your payment or payments.

• What you’re doing to overcome your situation. Let the representative know your plan, such as looking for other or additional employment, selling items to raise money, borrowing money from friends/family, etc. They may be more willing to work with you if they know you’re working hard to rectify your situation.

• How much, if anything, you can afford to pay. If you can make a payment, even if it’s less than the minimum due, let your card issuer know and then make that payment. A payment, even if it’s less than the minimum, demonstrates good faith on your part and makes it clear that you haven’t turned your back on your debt. And, from the credit card company’s perspective, it’s usually better to have some money coming in from you than nothing.

• How long you expect your situation to last. Let your credit card company know how long you expect it to be before you can resume making regular payments of at least the minimum amount due. Be realistic and don’t paint an overly optimistic picture, but don’t underwhelm them, either. Think in terms of billing periods. How many billing periods do you estimate it will take you to bring the account current?

• What you’d like to happen. What are you hoping to achieve with your phone call? One suspended payment? A temporary payment schedule? Removal of late fees? Let your credit card company know precisely what it is you want. This call is a form of negotiation, so be clear and specific about what you’re hoping to accomplish with it. You may not get what you want, but your chances of getting it are probably diminished if you don’t, or can’t, articulate what it is you want.

5. Put Your Plan Into Action

A plan is only as successful as its execution. So, if you made arrangements with your credit card company, then keep them. Pay what you promised, when you promised, how you promised. Their willingness to continue to work with you will likely depend on you living up to your end of any agreement reached. If you don’t do what you said you would, then why should they? Demonstrating your commitment to working through your situation could go a long way toward a credit card issuer offering you some form of relief.

6. Prepare for Consequences

Unless your credit card company agrees to waive late fees and interest, you’re likely going to be charged both. If you have a rewards credit card, you’re also likely to lose any accumulated rewards. And if your credit card issuer is reporting the past due status of your account, your credit score is also likely to take a hit.

These are simply the realities of missing a payment or payments. If you have a card issuer that’s willing to waive interest and fees, or let you keep any accumulated rewards, or even not report your account as past due, consider yourself very lucky. But even if your card issuer is willing to work with you, any of the above, as well as additional consequences, are a possibility. Being prepared for these consequences could help them to sting a bit less.

7. Formulate a Plan for any Aftermath

Unless your credit card issuer agreed not to report your delinquency to any of the major credit bureaus,  chances are that any payment over 30 days past due will be reported and will adversely affect your credit score. And a single delinquency can stay in your credit reports for up to seven years from the date of the delinquency.

But there are steps you can take to help your credit rebound. The single most important thing you can do going forward is to make at least the minimum payment on that account (and all other accounts) on time, every time, because payment history is the most important factor in determining your credit score. Keeping your credit utilization ratio at a healthy level— 30% or less as recommended by many experts—could also help improve your credit score.

Remember, falling behind doesn’t have to mean staying behind. By formulating a plan, and effectively executing that plan, it is possible to minimize, and eventually overcome, the effects of a missed credit card payment.