What to Pay When You Can’t Afford to Pay in Full

Yes, the advice you see in books and on the internet is that you should pay off your credit card balance in full every month. It’s great advice. Paying off your balance keeps you from paying interest on your purchases. It keeps you from getting over your head in debt. It leaves your credit limit open for emergencies. (Not that emergencies belong on a credit card, but that’s another story.)

Knowing all the advantages of paying in full doesn’t mean you can actually afford to pay in full. So what do you do when that happens?

Always pay the minimum. Though it’s not ideal, sometimes it’s ok to pay the minimum, especially when that’s all you can afford to repay. Minimum payments are also fine when you’re working on your own debt repayment plan and you’re making above-minimum payments on another credit card. But, if this is your only credit card with a balance, aim to pay a little more.

Pay what you can afford. Take a look at your monthly budget. Decide what you can reasonably afford to send to your credit card issuer. If there’s something you can cut out of your budget, do it. It will help you pay off your credit card balance sooner.

Come up with a payment deadline. How soon do you want to pay off that credit card balance? Divide your credit card balance by the number of payments you want to make and you’ll come up with (roughly) the amount of each monthly payment. For example, if you want to pay off a $600 balance in 12 months, you need to send at least $50 a month. Add a couple more dollars each month to take care of the interest, or be prepared to make a larger payment in the 12^th month.

Ask for hardship payments. If you can’t pay in full because you’re having financial trouble, ask your credit card company for help. They may be able to put you on a hardship program that would temporarily reduce your credit card payments until you’re able to make your regular payments. While you’re on a hardship program, your credit limit may be reduced or worse, your credit card issuer could take away your charging privileges. It’s just as well; if you can’t afford to make your credit card payments, you shouldn’t make any more charges.

Get consumer credit counseling. If you don’t meet the qualifications of your credit card issuer’s hardship program, consider consumer credit counseling. You can be enrolled in a debt management program, which lowers your credit card payment and interest rate. You’ll send your monthly credit card payment to your credit counselor who then sends your payments to your creditors. Most debt management plans try to have your credit card debt repaid within three to five years. If you can pay sooner on your own, credit counseling probably isn’t the best option for you.

When you apply for a credit card, you can’t foresee the payment issues that may come. But, if you can’t afford to pay off your credit card balance, there are options.