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I have tried to call each credit card company to request a lower Interest rate. Each has declined stating their rate increase isn’t open for debate and if I do not agree with the terms I can simply repay the total amount due and discontinue using their card! Then I asked about just discontinuing the credit line (cut up the card) and lower my interest rate just so I do not have to file for Bankruptcy and they will get paid. Still “Nope”…they said to call a credit consoling company or to go ahead and file if I need too. Two representatives said “I hear this same thing all day long” we are no longer lowering interest rates for this reason. That seems silly to me, work with me and you will get paid all that is owed and a reasonable interest or do not and get nothing???? So I was just wondering, what would happen If I just sent each company a hundred dollars a month with a letter stating this was “my” new contract to them. Would the hit on my credit be any different than the hit I get each month from being late? or from using a bill consolidation company that I must pay? or from filing for Bankruptcy? I would be paying them on time each month but just less than is owed due to the “extortion” interest rate. Can they do anything legally outside of reporting me to the credit bureaus? which they are clearing doing already. I have seriously thought about just sending each of them a hundred dollars a month with a letter explaining the amount and to please let me know when they have decided to work with “me”. Has anyone ever done this and if so what was the outcome? We all know a bankruptcy is not a good thing to have on your credit report, I can only imagine using a credit counselor is not either..however it does show ‘intent to pay’…the same thing I am doing by sending them each a hundred dollars and a letter of intent. I am not talking about a mortgage or auto loan…just credit cards who have raised their interest rate to nearly 30%. Thank you very much for any advice on life experiences in this area.

8 Thoughts on What happens if you just pay a smaller amount than is owed each month to your credit card company?
  1. Reply
    August 31, 2012 at 11:55 am

    If you pay less than what is owed each month, you are not paying as agreed. Therefore, you will only cause more and more late fees to pile up, making your balance even larger.

  2. Reply
    Charles N
    August 31, 2012 at 12:18 pm

    The credit companies have no legal obligation to disclose your letter of intent on your credit report. The best thing to do is keep these4 credit lines open, pay the minimum (at least) and then after 6 months of being on time and current then most credit card companies are willing to renegotiate things like interest rates or credit limits. What you need to keep in mind though is that you did sign binding contracts with all of these companies. If you simply stop paying the cards they have every legal right to sue for the money that you owe them.

  3. Reply
    August 31, 2012 at 12:33 pm

    Please see a bankruptcy lawyer. Your initial consultation is free. It is possible they ( the card companies) will negotiate with a professional representing you. Otherwise, they will take your payments, tack on late fees and interest, and you will have a heck of a time getting out from under them. As a practical matter, they can’t force you into bankruptcy, but sometimes, that is the best way to go, because the interest clock will stop ticking and you will have a finite amount to pay. The bankruptcy on your credit report won’t hurt you as much as the ongoing late fees and monthly credit hits. be wary of those credit counselors. Some of them take monthly fees, and insist you pay them, and they will disburse payments to your credit card companies. Some of them have been known to keep the payments. Don’t work with collection agencies, either. Get your own professional advice- a lawyer that is out to protect YOUR interests. Best of luck. And don’t forget to change your phone # if you are getting harrassing calls. Get an unlisted #.

  4. Reply
    Wilde Child
    August 31, 2012 at 12:35 pm

    This is not something you really want to play around with. If you don’t pay at least the minimum, you’ll be charged penalties out the wazoo and it will just make your situation worse. You will be reported, and it will make it impossible for you to open any sort of bank or credit account in the future. Having your bills sent to collections is possibly worse than filing for bankruptcy.

    Try speaking with a customer service representative from your bank and ask about loan options to consolidate your debt. A meeting with a financial adviser may be recommended to you, and it sounds like that’s something you should take advantage of, especially if you’re making payments of over $ 100 per month on several credit cards. It may be unfair that they raised their APR so much, but unfortunately that is a possibility that they stipulate in the consumer agreement before you even open the credit card, and so they technically aren’t extortionists. The terms were set upon before the contract was signed.

    You may be able to get some sort of unsecured loan with a lower rate than your credit cards. Even if your credit score isn’t exemplary, if you CAN get a loan, the rate will probably be lower than that of a credit card. You could use that loan to pay off the credit cards and consolidate to that single loan payment every month, but in order to do that you will need to cut up all of your credit cards and NOT apply for any new ones until the loan is paid off.

    It may sound strict, but when you have the kind of debt situation it sounds like you’re in, you must be strict with yourself to rectify the situation.

    Good luck.

  5. Reply
    August 31, 2012 at 12:36 pm

    There is a new law taking effect in 2010 that limits the behavior of credit card companies with regards to interest rates and late fees…until that time, credit card companies are being brutal and can legally do as they please. They are screwing you (and the rest of us) over for the same reason that a 6th grader can beat the living crap out of a 1st grader…because they can.

    You cannot change the terms of your credit card contract. Paying less will only get you late payment fees. One option:

    Entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). They can negotiate lower payments and interest rates. They do not negotiate settlements. Contact your local Red Cross for a referral.

    They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to “enrolled in debt management.” This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don’t use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you’re enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.

    Please note that CCCS cannot perform miracles in situations where there is an overwhelming level of debt relative to your income/assets.

  6. Reply
    August 31, 2012 at 1:16 pm

    This is a double-edged sword situation.
    If you pay less than the minimum amount due:
    1. It will show on your credit report every month as late (since you did not pay the amount required). You may never pay the debt off.
    2. But may possibly be enough to keep the company from taking you to court by staying under the radar and paying all their fees. They are making money.

    If you just stop paying all together:
    1. Your credit rating will still show as being late, but the score will not be as bad as if you declare bankruptcy.
    2. But you risk being sued by the credit card company.
    *Why choose this? Risk the statute of limitations expiring and then you are free and clear of paying the debt. But if you choose this, do not make another payment because the SOL is based on date of last activity (last payment) and will start all over again if a payment is made.

    If you declare bankruptcy:
    1. Your credit is ruined for 7 years.
    2. But you will not be responsible to pay the debt.
    *Why choose this? If you are in a situation where you will have no need to apply for credit within seven years, this option might be best. For example, if you are happily married, own a home, won’t be buying a new car (at least under your name), etc.

    Here is what you need to consider when making your decision. First, check what your state’s statute of limitations is on collectable debt. You can find this out from your state attorney general’s office. Keep in mind that the SOL begins at the date of the last account activity. For example, my state’s SOL is three years. So even though an unpaid account will be reflected as derogatory for seven years on a credit report, the credit card company can no longer attempt to collect the debt after three years.
    Second, how high is your balance? How high is the interest rate? How much are you paying? It will make no sense to pay a small amount for thirty years (all the while the account is “past due”) when it can fall off of your credit report in seven years.
    Please know this: I am not advocating neglecting to pay off a debt. When a personal disaster struck several years ago, I was forced into a situation similar to yours. I also paid little by little. I realized that I would NEVER pay off that balance but couldn’t afford to pay more. Then, once I could afford to pay more, I added up what I had already paid and the amount was twice the balance… Yet the card was still over the limit without being used in two years!

    Lots of information can be found on Suze Orman’s website. I included a link below that is specific to your situation. Good luck!

  7. Reply
    August 31, 2012 at 1:49 pm

    1. If you pay less than the minimum, the effect is the same as if you pay nothing: (1) you are charged a late fee, (2) your credit is ruined, (3) the debt is sent to collections, (4) you get sued.

    2. The hit on your credit would be the same as being late. It would be less than if you filed for bankruptcy. Filing for bankruptcy would be worse for your credit.

    3. Outside of reporting you to credit reporting agencies, they can also either (a) sell the debt to a collection agency, or (b) sue you.

    4. Showing “intent to pay” does not accomplish anything. A credit reports whether you do pay the minimum on time, or you do not. It does not indicate what you “intend”.

  8. Reply
    August 31, 2012 at 2:34 pm

    if u pay less than the amt owed the fees start mounding. sadly, so many ppl run in2 $ $ $ shortage, things DO come up & they just don’t have enough 2 pay everything.

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