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How Do You Start A Repayment Plan With a Credit Card Company?

09/23/2008

How do you start a repayment plan with a credit card company?

It’s never an easy thing when you can’t pay your bills. You do have options though, and it’s not difficult to set up a repayment plan. After all, lenders want you to pay them back, so they aren’t going to give you much trouble when you call to make arrangement. We get many questions about repayment plans. One of the most recent was from a reader named Gene:

How do you start a repayment plan with a credit card company? I get a paycheck bi-weekly. Can I split my credit card bill payment in half and pay them bi-weekly? Will this help me pay them off quicker ?

Thank you for your questions Gene!

How to start a repayment plan with your credit card company:

Normally, all you have to do is call your credit card company. If you are not currently past due, and you do not plan to be, then you really don’t need to make a payment arrangement.

If you call to make a payment arrangement when you are not past due, your credit card company will probably still tell you that you have to be past due or they can’t set it up.

Credit card repayment plans really only exist to help seriously past due accounts get back on track.

If you are past due with your credit cards, then be sure that you negotiate with the collections department. Collections representatives can set up payment arrangements, remove any of the fees on your card, and possibly even reduce your interest rate. All you have to do is ask.

Now, let’s take a look at your other question:

Will paying your credit cards bi-weekly help you to pay them off faster?

There are a couple of issues with this. In theory, yes you will pay them off faster by sending in bi-weekly payments because you will essentially be sending in a couple of extra payments in a years time. (This is assuming that you are splitting the minimum payments up between two payments.)

However, that is not a good way to pay your balance off faster. Also, some credit card companies may not let you make less than the minimum payment – even if you plan to pay the other half later.

There is no hard and fast rule that you can only make a credit card payment once a month. You can make a payment every day if you want to – they’ll accept your money any time. Be sure that you aren’t getting charged “telephone” or “processing” fees though. If that’s the case you may just want to make one payment a month to avoid an additional fee.

So, the best situation would be to call and make a payment plan if necessary. Promise them only one payment a month (in case you find you need your money) and then make an extra payment with your next check as often as you like.

As long as you are paying more than the minimum payment each month, then you will be getting your balance paid off faster. Just make it a habit to send in as much over the minimum payment amount as you can. Even if it’s only $25. Over time, it will add up.

If you have to make a payment arrangement, whatever you do, stick to the payment arrangement. Make sure you make at least the minimum payment on time as agreed each month, and then send in any extra money you have when you have it. Just don’t miss the payment you agreed to.

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