What happens if you pay less than the minimum on your cards?

If you have a credit card, you probably know that you have to pay a certain minimum amount each month. This amount is, perhaps unsurprisingly, referred to as the “minimum payment due”.

In an ideal world, you wouldn’t just pay the minimums on your cards. You would pay off your balance in full each month. This way, you could avoid interest charges, which can be very costly on credit cards. You can also make sure you don’t build up such a large balance that you damage your credit score.

However, we don’t always live in an ideal world. And there may come a time when you will have a hard time paying even your minimums. If you are wondering what will happen if you do some monthly payment type on the due date but not the total amount required, keep reading to find out.

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The consequences of non-payment of the minimum amount due

If you pay less than the minimum amount owed on your credit cards, unfortunately your card issuer will still treat that payment as a missed payment.

As a result, it could lead to all kinds of consequences including late payment fees. You could also see your credit score decrease if you are at least 30 days late in paying the minimum amount required. And, in some cases, your card issuer could freeze your card if you are very late.

Making less than the minimum payment also means you can’t cover credit card interest charges that were owed on your debt. The result of this is that your account balance will almost certainly increase rather than decrease even after you have made your minimum payment because you will have interest charges plus late fees added to your balance.

What if you can’t make the minimum payment?

It can be very frustrating trying to send a small payment and still find yourself dealing with all these consequences despite your best efforts. But the good news is, you may have other options.

To help keep credit card debt under control, contact your credit card issuer as soon as you know you won’t be able to cover the minimum amount owed. They may be able to offer you a payment plan or make some other type of agreement with you.

You may also be able to reduce the interest rate that you are currently paying. To do this, consider applying for any of the following:

These could potentially reduce your monthly payment amount, which could make paying your bills easier.

In some cases, debt settlement could also be an answer. This would involve negotiating with your creditors to pay less than the full amount owed and have the remaining balance written off. This can harm your credit, however.

Still, it can be better than bankruptcy and a good way to get out of debt if you are really in trouble. Just keep in mind that card issuers are more likely to work with you to settle your debts if you are past due. So missing a payment entirely rather than wasting money by paying less than the minimum may be your best option in this situation.

Whichever approach you choose, by being proactive you can hopefully prevent your credit card company from reporting a missed payment, which can negatively impact your personal finances.

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