Paying Less Than The Minimum On Credit Cards — Explained

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Millions of people use credit cards to make purchases and obtain rewards. Credit card companies charge interest for letting you use a revolving line of credit and set minimum monthly payments. Unfortunately, not every cardholder has the financial flexibility to afford the minimum payment. You should do everything possible to pay on time, but if you can’t, you have choices.

What happens when you pay less than the minimum on credit cards

Paying less than the minimum on credit cards will have several consequences. Many cardholders can survive missing a single minimum payment, but it’s best to avoid that scenario if possible.

You could face fees

Most credit card companies charge fees for missing the minimum payment. You continue to incur fees with each late minimum payment. The fee can be as high as $41 if you don’t make the minimum payment within 30 days of its due date.

Your credit score could drop

Payment history makes up 35% of your credit score. A late payment will hurt your history and drag your score down a few points. Continuously missing minimum payments will further damage your payment history, and the fees can make it challenging to stay on top of other expenses.

Your balance will likely go up

Late payment fees get added to your credit balance. You will also pay more interest for letting credit card debt linger. It’s best to pay more than the minimum when you can afford to make more progress with your balance. Letting the credit card balance rise for too long can create significantly higher financial stress in the future.

Long-term consequence of paying less than the minimum amount due on your bills

Missing several minimum payments can put you in a tight financial situation and compound existing issues. Each late payment increases your credit card balance, and with several months of unpaid minimums, your balance can soar from the interest charged. Consumers will also end up with lower credit scores and have a more difficult time qualifying for loans. If you apply for a loan, you may have to pay a double-digit interest rate. 

Struggling to keep up with minimum payments can create more financial challenges and reflect continued difficulties with paying off bills. It’s best to start with the minimum amount and make progress with the balance. Working extra hours, pursuing side hustles and trimming your expenses can make a difference.

What to do if you can’t meet your minimum payment

If you cannot meet your minimum payment for the month, you have several choices. We have highlighted them below.

Contact your credit issuer

Let your credit issuer know about your financial situation and see if you can work out a payment plan. It’s important to remember that you are not reaching out to a corporation. You are reaching out to a person who works at that corporation. Being courteous and honest about your situation and explaining how you can catch up to minimum payments with some help will put you in a better position.

Ask for extra hours or an advance at work

Working extra hours can give you enough funds to cover the minimum payment. If your employer doesn’t allow overtime or won’t bump you to full-time if you work part-time, ask for an advance. Some employers will give you a week or two of upfront wages to cover the minimum credit card payment and other expenses. While a salary advance provides immediate relief, it can put you in a challenging spot the following month since you are not receiving your usual salary based on the agreed terms of the salary advance.

Consider debt settlement

During a debt settlement, the borrower and creditor agree on a debt payment plan. You will end up paying less than the original debt, but you must pay the debt settlement. Not every creditor will agree to a debt settlement. 

Seek out a credit counselor

A credit counselor can guide you on the right path and help you minimize debt-related expenses. You can discover if debt settlement, consolidation or another strategy is best for your situation.

Consider debt consolidation

Debt consolidation is a strategy where you get a loan with a lower interest rate to repay high-interest debt. You can adjust the loan’s duration based on your budget. A lengthier loan keeps you in debt longer but has lower monthly payments. You can catch up with your minimum payments and pay off small debts as well. Having your debt as a single loan can make it feel more manageable.

Cut your spending 

Credit card balances increase because consumers spend money and let the interest grow over time. Reviewing your recent credit card statements and subscriptions can help you detect unnecessary expenses. People who have not done this activity before will probably find several opportunities to save money. Cost cutting provides immediate benefits and is a great practice, but it has limits. The long-term solution is to keep costs low while looking for opportunities to increase your income. 

Making the Minimum Payment

The minimum payment will keep your account in good standing and limit the damage done by credit card interest charges. Many financial advantages come from trimming expenses and looking for opportunities to generate additional income. If you have difficulty keeping up with the minimum, you should see what you can do in the moment and then assess how you got into this situation. Knowing how you arrived at your current financial outlook will help you take steps to improve it. 


What happens if you can’t pay the minimum on your credit card?

If you do not make the minimum payment, you will incur late fees and lose points on your credit score. Missing several payments can result in soaring credit card debt.

Can credit card minimums change from month to month?

Credit card minimums can change from month to month. A higher credit balance and other factors can increase the minimum.

What is the minimum payment on a credit card?

The minimum payment is the amount you have to pay each month to keep your account in good standing. Interest can still accumulate on your remaining balance, but minimum payments will keep your credit score intact.

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