What Happens If I Pay Less than the Minimum Due?

It's time to pay your credit card bills.

Let's say your minimum due this month is $100, but you've only got $50 left to spare. What happens if you send a payment but it's less than what you owe?

I’m not sure where it started, but there’s a fairly common misconception out there that if you send a creditor a payment below the minimum and they take that payment, they have “accepted” the payment, and now everything is square. Quite a few folks seem to think that every time a creditor accepts a payment, they’re making a legal agreement, one that says, “We cashed this check, so your required payment has been satisfied.”

Creditors will almost always take whatever amount you send them – you owe them money, they want that money, so they’re not going to say no. But when you sign an agreement for a loan or a credit card, you agree to make a certain minimum payment each month. If you don’t make that minimum payment, unfortunately, you’ve breached the contract and there will be consequences.

Consequences of sending a short payment

You'll be considered late

Right off the top, failing to send the minimum required payment can net you a late fee tacked on to your next bill. Some creditors may offer a grace period, but that would only save you in the event that you quickly made up the difference between what you sent and what was owed. If you only send the short payment, expect a late charge.

Your account may be considered delinquent

Even if this was just a one month slip up, the impact to your credit can be surprisingly harsh. Your payment history is typically the number one factor in all credit scoring models, after all.

When you fail to make a full payment, your account is usually considered 30 days past due, and it will remain past due until you get caught up. Even if you make the next month's payment in full, that partial will haunt you until it gets squared away.

You may lose any promotion offers or even your current APR

Again, a short payment isn't much different from a missed payment, and the penalty for a missed payment can be steep. If you're in the middle of a promotional period (like 0% interest, or deferred interest for a certain number of months) that promotion may be null and void as soon as you miss one payment. 

Similarly, depending on the terms of your credit card agreement, your current interest rate may be at risk if you miss a payment. Some issuers may apply a temporary or permanent penalty APR of 29.99% or higher.

You minimum may be bigger next month

The amount you didn't pay this month is often added to your minimum for next month. So if this month was a struggle, next month certainly won't be any easier. 

If you can't meet your minimum payment

If you can’t meet your minimum payment, your first step should be to contact your creditor. Let them know what the situation is and see if they can help. Many lenders offer short-term hardship programs that could potentially reduce your minimum payment for a fixed number of months. You should keep in mind, however, that these programs are only designed to keep your accounts from going delinquent. You won’t make much progress paying down your debt while you’re on a hardship program.

Continued failure to meet your minimum payments may be indicative of budgeting issues, bad spending habits, or simply carrying too much debt to properly manage. A certified credit counselor can help you better understand why you’re struggling and offer a variety of potential solutions to help you stabilize your finances.

Whatever you do, don’t just keep making short payments. Unless you’ve come to a new agreement with your creditor, consistently making less-than-minimum payments will eventually end with you defaulting on the account, which will more than likely put the account into collections. The sooner you address the problem, the better.

If your creditor can’t help you, or if you have multiple accounts where you’re struggling to meet the minimum payment, you may benefit from a nonprofit debt management plan, which can help you consolidate your payments into one, budget-friendly amount, while saving on reduced interest costs.