Here’s what to do if you can’t pay your credit card bills
skynesher | E + | Getty Images
If you’re having trouble keeping up with your credit card bills, it may be helpful to call your bank.
While at least one major bank expects many customers to default on this debt, consumers who contacted their card issuer for a coronavirus-related break on monthly payments were largely successful, according to one. LendingTree report.
Of those who requested a reprieve (around 30% of those surveyed), 67% got a break on every card they inquired about, and 24% had a partial success rate with multiple cards.
Many banks offer ways to temporarily ease the burden. Help can come in the form of reduced interest rates or lower minimum payments, extended payment terms, waiver of late fees, or failure to report late payments to credit bureaus.
More from Personal Finance:
What to expect if you have a 401 (k) loan and lose your job
Why owning individual stocks can hurt you
Scammers are looking to steal your stimulus check
“Lowering your interest rate helps in the long run, waiving fees helps a bit in the short run, but if you can skip a payment without a significant penalty, it may be the best option right now,” said Matt Schulz, Chief Credit Analyst. for LendingTree.
“If your financial life has been turned upside down, what you want the most is something that will help you immediately,” Schulz said.
Consumers bear about $ 1 trillion in credit card debt, according to the Federal Reserve. For those who carry balances from month to month, the the average total due is approximately $ 7,100, according to NerdWallet. At the same time, unemployment has skyrocketed and cash-strapped households need help.
As with a break in mortgages and other types of loans (except Federal Student Loans, which have a separate stay until September), delaying a credit card payment will not cause you to lose the amount. of. And, it’s likely that interest will continue to accrue, Schulz said.
If your card issuer lets you skip a month without a penalty, ask them if they won’t report a late payment to the credit companies either. Under normal circumstances, a 30 day late payment ends up on your credit report.
“This may be what prompts the lender to report the late payment to the credit bureaus and you get a negative rating on your credit report,” Schulz said.
Depending on the specifics of your situation, this can lower your credit score by as much as 60 or 70 points, he said. It also stays on your report in the future.
“It’s the kind of thing that doesn’t just last a few months, but can hurt your credit for several years to come,” Schulz said.
Also, be sure to get something in writing from the card issuer that details the terms of anything offered and accepted to you.
“You have to get it in writing so you know exactly what the card issuer is offering and what is expected of you,” Schulz said.
And, if a month of non-payment isn’t enough, there’s a chance you could get a longer stay.
“It’s worth asking,” Schulz said. “One thing that makes it so difficult is that we have no earthly idea when this is all going to end.”