Editorial Policy

If payment will be late, it’s best to call issuer

Erica Sandberg

April 28, 2016

Q Hi Erica,

If I know I’m going to be late on a credit card payment, is it worth it to call my issuer to let them know? Is there a point in doing that? — Faye

A Dear Faye,

Yes, it’s a wise idea to contact a credit card issuer if you believe you can’t make even the minimum payment. Doing so may save you money and possibly even spare you from credit damage.

If you can’t send at least the minimum payment by the due date, the credit issuer will hit you with a late fee (usually around $25). If your minimum payment is $25 or less, the fee can’t be more than that amount. Still, it’s an extra charge that you don’t want added to your bill, especially when you’re already struggling, nor do you want that late payment showing up on your credit reports.

Calling the credit issuer and explaining why you are not able to pay on time may result in the issuer waiving the late fee, but you have to ask. You’ll also need a sound reason (such as a medical issue that is preventing you from earning as normal this payment cycle or other reasonable excuse) and a positive record of paying on time in the past. The issuer can deny your request to avoid the late payment, but it never hurts to inquire.

Another benefit of communicating with your credit issuer before you go delinquent is that you may be able to work out an alternative payment plan. Maybe you need a break in excess of a few days or weeks. Again, if you have a positive relationship with your card issuer (which means you’ve been a good customer in the past), you may be able to arrange a hardship plan in which you pay less than the required minimum for a fixed period of time. With a hardship plan,  your credit rating may be preserved, and you will avert collection action and lawsuits. The issuer may also agree to waive fees and lower interest during the term of the hardship plan.

Before approaching a credit issuer with a cash crunch problem though,  explore all reasonable options to coming up with the minimum payment. You don’t mention what your debt is, but if it’s $5,000 and the APR is 17 percent, the minimum would be about $150. Can you find a way to come up with that amount? Here are just a few ways to come up with quick cash:

  • Sell unnecessary items that match the value of your payment. Drag a bunch of stuff into your front yard or post those items online on Craigslist, for example, then apply the proceeds from the sale to your card payment.
  • Forgo paying another bill that doesn’t charge interest or add late fees. It’s a temporary measure, but this can work in the short term.
  • Go on a crash cash diet. Maybe you’ll have enough to send your credit issuer if you stop all except vital spending. Can you get by eating rice and beans for a month?
  • Ask a friend or family member for a loan, but you must have a plan to repay that person. There are worse consequences than a credit ding or fee. Losing the respect of a loved one is among them.
  • Take on extra work. This is not always practical because employment opportunities vary greatly by location and I have no idea what your skill set is, but if you can make additional money now, do it.

If you are sure that you can’t pay at least the minimum as agreed in your contract, have your facts in order when you call your card issuer. A generic, open-ended “I need help” isn’t enough. Be prepared to explain what the situation is, how you’ve tried to rectify it on your own, and how long you will need to get your finances back on track. Be honest and composed. Never promise what you can’t deliver. It can be tempting to say you’ll be A-OK faster than you know you will be, but it’s a major mistake because you may not get a second chance from your issuer.

Finally, ask to speak with a supervisor who can assist you with a plan to keep your credit in fine shape, and back up the conversation with a letter outlining what you discussed.

Good luck!

Got a question for Erica? Send her an email.

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