How To Deal With Delinquent Credit Card Accounts (2024)

There are a number of reasons you may find yourself with a delinquent account. Maybe you closed a bank account set for an automatic card payment, your partner made a purchase with a rarely-used card or you simply missed a bill in the mail. Perhaps job loss or illness caused an unexpected financial challenge. Whether you’re unable to make your minimum payments or merely forgot, a delinquent credit card account can cause some unwelcome challenges.

When Is My Account Considered Delinquent?

If your payment is due on the 25th of the month, your credit card payment is technically considered late on the 26th of that month. Late payments are reported to the credit reporting bureaus with a “current” code, indicating that the payment is 1-29 days late. Once your account is more than 30 days overdue it is considered delinquent and will be reported to the credit bureaus as such.

Be Proactive

Regardless of the reason your payment is late, your first step is always the same. Pick up the phone and call your credit card provider. Delinquencies and late fees can make the process feel overwhelming, but opening the line of communication early can increase your available options.

Let your credit provider know what happened. If you simply missed the bill in the chaos of life let them know you’re ready to pay on the spot. If you can make a case that you are consistently on time with your payments, you can ask that your late fee or additional interest be waived.

If there are extenuating circ*mstances for your missed payment, calmly explain them. If you lost your job, are experiencing medical issues or a death in the family, many credit providers offer a hardship program. These programs are not widely advertised, so the best way to learn of your options is to communicate your situation to the customer service representative.

Verify All Transactions

Even if you’re careful, fraud happens. Before you commit to any payment plan, verify that you made all of the purchases on the statement. If you find a fraudulent purchase, make sure that you dispute this charge with your card provider before discussing payment options.

It’s a good idea to regularly review your statement for unknown purchases, but if an account has fallen delinquent it may not be on your radar. Make sure to review all the charges and ensure you are responsible for them.

Make a Plan

Do the Math

It’s worth taking some time to revisit your budget and determine exactly what you can afford. If you’re unable to make the minimum credit card payment, be realistic about what you can afford each month. Don’t over-promise how much or how frequently you can make payments.

You may also want to consider alternatives for increasing your cash flow. Do you have new items you could return to the store for a refund? Could you pick up extra hours at work or take on a side gig? Could you reduce spending for a season? Are there items you could sell?

Remember not to count on this potential income until you know that it is guaranteed.

Negotiate Your Payments

Your card provider is incentivized to work with you because they don’t want to have to charge off your account. You want to avoid having this debt sent to collections and they want to recoup their lost investment. So they may be willing to work with you if you call them and explain your situation. Depending on your circ*mstances the call representative you initially speak with may be authorized to help you. If they’re not, you may need to speak with another department.

• Ask if you qualify for a hardship program.
• Let them know how much you are able to pay.
• If your circ*mstances are temporary, communicate when you expect to be able to make regular payments.

Get It in Writing

If your credit card provider agrees to a payment plan, get it in writing. Request that they include language stating that if you adhere to the payment plan your account will be reported as current to the credit bureaus. Review the written plan once you receive it and ensure it meets your understanding of the agreement.

Keep Diligent Records

Keep a copy of the payment agreement. Make sure to keep a log of all calls to your creditor including the date, time and a brief recap of the content of the call. You should also log any payments made toward your debt. These records will help with any future communications with your creditor.

Reduce Additional Card Purchases

When money is tight, credit cards are sometimes your best means of emergency payment. However, make sure not to increase your debt on other cards in order to cover the delinquency payment for one card. It’s best to only have one creditor reporting delinquency, if possible.

If you find yourself with multiple accounts in delinquency at one time, make sure to contact all of your creditors. Explore your payment options and look for ways to cut back where possible. If you’ve trimmed your budget and are still struggling, reach out to a HUD-approved credit counselor. They can help you better evaluate your options and consider if debt settlement is necessary.

Know the Consequences of Delinquency

Loss of Your Rewards Points

Most credit cards indicate that you will not earn rewards and points cannot be redeemed if your account is not in good standing. In some cases, especially if your account is closed, you may lose your points entirely.

For this reason, if you anticipate being unable to make a payment, consider redeeming any cash back for statement credit before you miss a payment.

Late Fees

Many credit cards charge late fees. Additionally, if you are more than 60 days delinquent, you may find that your account is charged a higher interest rate, known as a penalty APR.

Reduced Credit Score

Your creditor will report your delinquent account to the credit reporting agencies. This negative data will result in a reduction of your credit score. Negative activity, such as a delinquent account, can stay on your credit report for 7 years. If you had excellent credit, it is likely that a delinquent account may more adversely impact your credit than if you have poorer credit with previous late payment recorded.

Rebuilding Your Credit Score After Delinquency

While there’s nothing you can do to remove that blemish, you can take simple actions to raise your score in other areas.

Pay On Time

Making your minimum payment on time each month is the best thing you can do to rebuild your credit. Timely payments account for 35% of your FICO credit score. And while that delinquency will stay on your record, every month you have a timely payment it’s impact will be reduced.

Pay Down Your Debt

The second greatest impact to your credit score is your debt-to-available-credit ratio, also known as your utilization percentage. You can raise your credit score by paying down the balance on your credit cards. When possible charge less or make more than the minimum payment.

Keep Your Older Credit Cards Active

After credit issues, people are tempted to overcorrect. If you plan to close accounts so that you don’t accumulate debt in the future, consider keeping your oldest credit account open. While the length of credit history only accounts for 15% of your score, keeping your oldest credit account active will ensure your credit score doesn’t drop even further.

How to Avoid Delinquent Accounts

Once you resolve your delinquent accounts, you want to ensure timely payments in the future.

• Avoid carrying a balance when possible.
• Set up automatic payments each month, especially for cards you rarely use.
• Update your contact and mailing information to receive card notices in a timely manner.
• Establish an emergency account for bill payments and unexpected costs.
• Call your card provider before you miss your next payment.

Bottom Line

Start the conversation with your creditor as soon as you know there’s a problem. Be honest and ask what can be done to keep your account current. Get any agreements in writing and stick to them. While this process may be tedious and require tightening up your spending, getting on a payment plan can help restore your card to good standing.