Being short on cash is stressful, but most of the time the solution to a dwindling bank account is cutting out a few social events and trips to the mall. This isn’t exactly fun, but the situation is temporary. But what if you’re so cash-strapped that you can’t make the minimum credit card payment? If you find yourself in this situation and aren’t sure what to do, take a look at the information below for the five steps you should take right away.
1. Get creative
If your usual paycheck isn’t enough to cover your credit card payments, try scraping together some extra cash before taking further steps. This might take a little creativity, but it’s worth it to avoid the consequences of missing a payment.
Try selling unwanted items from around your home, babysitting your neighbor’s kids, or returning some of the things you’ve recently purchased to come up with extra money. You’d be surprised how much money you can come up with when you really need to!
2. Fess up
If you’ve already tried earning extra money but there’s still no way for you to make your credit card payment this month, the next thing you should do is call your credit card company and tell them the truth. This might seem counterintuitive, but it’s important to be honest with your card issuer because there might be options out there that you’re not aware of.
For example, many credit card companies are willing to extend your due date or allow you to make modified payments if you find yourself in a bind. If there’s a particular reason that you can’t pay this month – for example, you’ve lost your job or are facing a serious medical crisis – be honest about this, too. Be sure to ask the customer service representative what they typically do for customers facing your situation, because you’re certainly not the first one.
When you’re on the phone with your credit card company explaining that you can’t make your minimum payment, another strategy to try if you have at least a little bit of money to spare is bargaining. For example, if you can’t make your whole minimum payment but you can make half of it, offer them the reduced payment. This might be enough to avoid getting your missed payment reported to the credit bureaus.
Another tip, assuming you’ve been a good customer so far, is to point out that you’ve never made a late payment in the past and have always paid at least the minimum. These factors might make it easier for the credit card company to show you some leniency.
If you can’t make your payments, banks will usually prefer to work something out with you than bring in the debt collectors. If a bank sells your debts to a collection agency, it only gets pennies on the dollar. It would prefer to recoup more than that by arranging a payment plan with you directly.
4. Prioritize paying
Once you’ve worked something out with your credit card company, make it your first priority to pay the bill as soon as you have the cash. Most credit card companies don’t report late payments to the credit bureaus until you’re 30 days past the due date, so you may be able to avoid a ding to your credit score if you pay as fast as you can.
» MORE: How to pay off debt
5. Don’t let it happen again
We all overcharge sometimes, but if your spending is so out-of-control that you can’t make your minimum payments, it’s time to take a look at your money habits and make some adjustments. Missing multiple credit card payments is a recipe for disaster when it comes to your credit score, so follow these tips to keep your finances in order in the future:
- Track your spending carefully and make sure you don’t charge more than you can afford to pay off in one month
- Make a budget so that you know where your money is going
- Set an alert on your phone or calendar to remind you of your bill’s due date
- If you’re not earning enough to keep up with your bills, get a second job or ask for a raise at your first job
- Reduce other monthly expenses so that paying your essential bills is easier
The bottom line: not having enough cash on hand to pay your credit card bills is scary, but there are steps you can take to minimize the damage. Whatever you do, don’t ignore the problem, and make sure to make adjustments so that this doesn’t happen again!