Can making a partial credit card payment prevent a charge-off?
A partial card payment may buy you some breathing room, but what happens next depends on how much you pay.
As of late 2021, high interest rates, rising prices and an uneven job market have made it increasingly tough for borrowers to keep up with their credit card payments. When an account becomes several months overdue, resolving the issue can become more complicated, with limited time to catch up. This leaves borrowers with a choice: use available funds to pay the overdue amount or use them for essential expenses.
Sending partial credit card payments may seem like a good way to avoid a charge-off, but this is not always the case. Credit card delinquency is not determined by the amount paid, but by whether enough has been paid to bring the account current. Federal guidelines generally consider accounts past due 180 days to be charged off. Therefore, even if you make a small payment, your account may remain delinquent and move closer to charge-off.
So, can sending a partial credit card payment prevent a charge-off? Not necessarily. While a partial payment can reduce the outstanding balance, it may not be enough to prevent the account from reaching the charge-off stage, particularly if you have missed several payments. Instead of making arbitrary small payments, contact your credit card issuer to determine how much you need to pay to bring the account up to date. This amount may be higher than a regular minimum payment.
If you cannot afford the required payment to bring your account current, explore other options for relief. Some credit card companies offer hardship programs that temporarily reduce payments, lower interest rates, or adjust repayment terms for financially distressed borrowers. These programs can provide more manageable repayment options if you anticipate resuming regular payments in the future.
Alternatively, you may consider other debt relief strategies such as credit counseling, which can place eligible unsecured debts into a debt management plan with more manageable repayment terms, including lower interest rates and fees. Another option is debt settlement, where you or a debt relief company negotiate with your creditors to reach a settlement for less than the full balance owed.
While these strategies may help you avoid a charge-off, they may still result in the debt being sold to a debt collector or you remaining responsible for the remaining balance after the account is charged off.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
