Can making a partial credit card payment prevent a charge-off?
Between today's high rates, elevated prices and uneven job market, it's getting harder for borrowers to stay current on their payment obligations, particularly when it comes to their expensive credit card debt. After all, budgets have been stretched thin by the numerous challenges looming, making it increasingly difficult to cover both the essentials, like housing and food, and the monthly payments on high-rate debts. If you fall behind on your credit card debt, though, it can be surprisingly difficult to catch up, particularly once the extra fees and interest charges are added in.
And, once an account is several months past due, the window for resolving the delinquency can start to narrow. That can leave you with a tough choice: You can put whatever money you have available toward the overdue card, even if it isn't enough to cover the full amount due, or use that cash for other pressing expenses while you figure out a long-term solution. But while sending in a partial credit card payment may seem preferable, when a credit card is approaching charge-off, the amount you pay matters.
So, can making a partial credit card payment keep a charge-off from occurring, or is it too late to take that approach? Knowing the answer to this question can help you decide what to do with the money you have available.
Find out what debt relief options are available to you now.
Can making a partial credit card payment prevent a charge-off?
If you're several months behind on your credit card payments, sending whatever you can afford to your credit card issuer may seem like a logical way to keep the account from being charged off. A partial payment doesn't necessarily stop that process, though.
That's because credit card delinquency generally isn't determined by whether you've paid something toward the account. What matters is whether you've paid enough to cover the amount required to bring the account sufficiently up to date. Federal banking guidance generally calls for open-end credit accounts, including credit cards, to be charged off when they reach 180 days past due.
So, if you're several payments behind and send $100 toward the balance, that money will reduce what you owe. But if the payment isn't enough to address the past-due amount, your account can remain delinquent and continue moving toward charge-off. In other words, making a small payment doesn't automatically restart the delinquency timeline or give you another 180 days to resolve the issue.
That distinction becomes especially important as you get closer to the charge-off date. Instead of sending an arbitrary amount and assuming it will protect the account, it makes sense to contact your card issuer and ask what you would need to pay to change its delinquency status. The amount could be significantly higher than one regular minimum payment if you've already missed several.
If you can't afford that amount, it's also worth asking whether the issuer offers another way to get the account back on track. Some credit card companies offer hardship or loss-mitigation programs that can temporarily reduce payments, lower interest rates or otherwise adjust repayment terms for borrowers experiencing financial difficulties. Depending on the program and your situation, entering into an approved repayment arrangement may give you a more realistic path forward than making occasional partial payments on your own.
The important thing is to address the problem before the account reaches the charge-off stage. A charge-off doesn't eliminate the debt; you can still owe the balance afterward, and the creditor may continue collection efforts or transfer or sell the debt to a debt collector. So, if you have limited money available, finding out exactly what your card issuer requires before making a payment can help you use those funds more strategically.
Learn how to get help with your high-rate credit card debt today.
What if you can't afford enough to stop the charge-off?
If you've reached the point where you can't make the payments required to get your account back on track, it may be worth looking beyond one-off partial payments. Putting $50 or $100 toward the balance periodically can reduce the debt somewhat, but it may not solve the underlying problem if the account remains severely delinquent.
As noted above, one option is to ask your issuer about a credit card hardship program. Depending on what's available, enrolling in one could result in a lower monthly payment, a reduced interest rate or another type of temporary accommodation that makes repayment more manageable. This can be especially useful if your financial setback is temporary and you expect to resume regular payments later.
If your financial problems are more significant, you could also benefit from exploring other forms of debt relief. A credit counseling agency, for example, may be able to place your eligible unsecured debts into a debt management plan with more manageable repayment terms, including reduced interest rates and fees.
Or, it could make more sense to pursue debt settlement, also known as debt forgiveness, especially if you can't reasonably repay your credit card balances in full. With this approach, you or a debt relief company you work with attempts to negotiate with creditors to agree on a settlement that's less than the total balance owed.
The key is to compare those and your other options before an overdue balance gets further out of control. If you have money available for a partial payment, find out whether that payment will actually improve the status of your account or whether those funds would be better used as part of a formal repayment or debt relief strategy.
The bottom line
Making a partial credit card payment can reduce your outstanding balance, but that alone may not prevent the account from eventually being charged off. If the payment isn't enough to change the account's delinquency status, the issuer may still move toward charge-off as the account approaches the applicable deadline. Rather than guessing about how much you need to send, contact your issuer and ask what it would take to address the delinquency. And if you can't afford that amount, consider whether a hardship program or another form of debt relief offers a more realistic way to deal with what you owe.
