If you must pay less than the minimum, call and explain


Credit Wise
Credit Wise columnist Kevin Weeks
With more than 20 years experience in the nonprofit credit counseling industry, Kevin Weeks joined the Financial Counseling Association of America (, @TrustFCAA) as its president Dec. 1, 2014. Weeks has extensive knowledge of both the credit counseling industry and the FCAA organization, having served in leadership positions for three of its member agencies and on the FCAA board of directors. In addition, Weeks is working with FCAA members to help develop a long-term solution to the student loan crisis through the website Weeks holds a bachelor of science degree in business administration, management information systems from Salem State University.

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Question for the expert

Dear Credit Wise,
If I pay less than the minimum balance should I call the credit card company or doesn't it matter? -- David 

Answer for the expert

Dear David,
If you pay less than the minimum amount due on a bill you are in violation of the agreement you signed when you opened the account. You will probably be charged a late fee even if you make your payment on or before the due date. Your creditor will have questions about the short payment. You must be prepared to answer those questions, whether you call them or they call you. So, in answer to your question, yes I think it does matter and a call from you rather than a call to you would be better.

You must explain why you are paying less than you owe. It could be that your financial problems are just a temporary setback and you will be able to catch up with your payments in a short period of time. If this is the case, you should call your creditor and explain your situation as soon as possible.

Most credit card companies offer short-term hardship programs that will reduce your payment and maybe even your interest rate. These programs generally only last about six months. At the end of this type of program, your payments and any other concessions you have been given will revert to the original agreement.

This type of arrangement can be very helpful if what you are experiencing is indeed just a short-term problem. Your accounts will not be closed and as long as you make the new payments in full, your account will remain in good standing with the creditor and not be reported to the credit bureaus.

However, if you don't think a short-term solution is right for you, you might consider calling a certified nonprofit credit counseling agency. A counselor will go through a budget session to see where you stand and be able to tell you your options for taking care of your debt at the end. Your counselor will walk you through all of the advantages and disadvantages of each option. One option might be a debt management plan.

One advantage to a debt management plan through a credit counseling agency is that they can talk to your creditors for you, relieving you of the problem of calling them yourself. You can find a qualified agency through either the Association of Independent Consumer Credit Counseling Agencies or through the National Foundation for Credit Counseling.

Be wise with your credit!

See related: When does a debt management plan make sense?

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Published: April 18, 2015

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