Posted on April - 02 - 2010
Have you missed a payment?
Missing a card payment can be a nerve-wracking event if your credit is less than stellar and you are trying to build up a positive history. In recent times, a missed payment can result in a bank drastically reducing your credit limit, jacking up your annual percentage rate (APR) and worst of all, put you into default status.
Default is something that you should be trying to avoid with all your power. It immediately signals to existing and future lenders/creditors that you don’t know how to handle your finances and makes them extremely hesitant to do business with you. Although resuming your payments will bring you out of this status, it still is a red flag on your credit history, and can haunt you for up to four years.
If you missed a payment, the first thing I recommend is contacting your bank’s card services department. Explain your situation. Be nice and polite. In many cases, the bank will give you a one-time fee waiver and restore your account to its previous status. I accidentally missed a payment on my Bank of America AMEX card a few months ago and a friendly account manager was more than happy to clear my record when I asked nicely. As long as you don’t have a record of delinquency, bankers are usually more willing to help you out in the case of a mishap.
If you missed a payment because you couldn’t afford to make one, that gets a little more tricky. My recommendation in this case is to be honest about your situation with your bank. Although this reflects worse on your account than an accidental miss, nine times out of ten, the bank will at least respect the fact that you are informing them of your change in financial status and find a solution. In most cases, this involves freezing your credit card and structuring a repayment plan so that you don’t go any further into debt than you already are.
Bottom line: Be safe with your cards and don’t spend outside what you can afford to pay back within a month or two. If you need help, ask for it. Many banks are much more willing to negotiate and work with you on recovering their money before it goes into a collections status and your credit gets ruined any worse than it has to be.
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