Contact your credit card lender
Get in touch with your lender's hardship department. Tell them you're in financial hardship and why you're struggling to make repayments.
In most cases the credit provider or finance company will help you with a repayment arrangement based on what you can afford. They may be able to:
- Stop charging you interest
- Change the payment to an amount you can afford
- Give you a few months to get back on your feet
- Waive your debt if you are experiencing extreme hardship or have an exceptional circumstance
Be prepared before you make contact. Read about how to negotiate payment terms.
If you get a reduced repayment arrangement, it means:
- Your payments will be reduced, but the overall time to pay will take longer.
- The overall cost of a loan may therefore be greater.
- You’ll still have to pay off your debt even if your lender cancels your credit card
Remember, if you're successful in coming to an arrangement, you need to keep to that arrangement. If you can't afford the repayments ring your lender and change the arrangement. Your lender may cancel your credit card at any time and is likely to do so if you're behind in repayments.
Paying the minimum amount
If you only pay the minimum, your debt will keep growing!
For example, if you owe $5,000 on your credit card at an interest rate of 18% and you only make the minimum payments, it would take you 33 years to clear the debt with total repayments of $17,181. But if paid $246 per month, you'd clear the debt in two years and pay $5,902 in interest.
Useful tools to help you work out what you can afford are MoneySmart’s Budget Planner and Credit Card Calculator.