How to Prioritize Credit Card Bills When Money Is Tight

These simple strategies can help manage your credit card payments.

A man checks his credit card statements as he decides what to pay and when.

MoMo Productions / Getty Images

If money is so tight these days you can barely pay your credit card bills, you’re not alone. According to credit bureau TransUnion, the percentage of debtors negotiating a financial hardship plan with their credit card issuers went from 0.01% in March 2020 to 3.22% in April. But before you give up on your bills altogether, it’s smart to strategize your credit card payments so you can shield yourself from even more pain. 

Conserve Cash 

Whether you’ve lost your job or are just barely hanging on, it’s critical to preserve as much money as possible so you can financially survive a lengthy job hunt.

Although building an emergency fund is tough when your income is diminished, it’s possible to eke out a small cash cushion by spending less money on debt.

For example, if you typically pay your cards in full each month or pay well above the minimum amount due, now may be one of the few times it makes sense to pause your most ambitious payments––at least temporarily.

Paying just the minimum amount due will cost you more in interest. But temporarily reducing your monthly payments may also give your budget some breathing room. And, remember, reducing payments should be part of a broader strategy to reduce your budget and save cash.

Save money on interest by reserving your biggest bill payments for the cards with the highest interest rates. You can find your card’s APR on your credit card statement or online account.

Refinance Your Debt  

Another good way to reduce your monthly payments and preserve your cash is to transfer some of your credit card debt to a 0% APR credit card or pay it off with a low-interest personal loan. However, you’ll typically need ongoing income and good to excellent credit to qualify for the best deals.

Knowing your credit score will help you determine what options could be available. (Many lenders say what their minimum credit-score requirement is.) You can check your score for free using Discover’s Credit Scorecard or Capital One’s CreditWise.

Ask Your Credit Card Issuer for Payment Relief

If you’re really under financial duress, you may be tempted to stop paying bills you just can’t afford. But before you skip a payment––it can damage your credit scores––check with your issuer to see if they will help relieve at least some of what you owe.

Your credit card issuer may offer a credit card hardship program or temporary relief option.

Many credit card issuers, for example, are offering short-term debt relief such as deferred payments during the coronavirus pandemic.

Some issuers also offer financial hardship programs year-round. Debt relief options vary by issuer. However, you may be able to negotiate:

  • A lower minimum payment amount
  • Reduced interest
  • Fee waivers
  • A debt settlement plan 

Credit card issuers offer payment relief on a case-by-case basis. So, it’s worth your time to call each card issuer directly, explain your situation, and ask what they can do to help. You may find some companies are more generous than others.

If you’re unsure what to say, the CFPB has a great tip sheet for cardholders who can’t pay their bills.

Seek Help From a Credit Counselor

You can also seek help from a nonprofit credit counselor, even if you’re so short on money you can’t pay a fee. For example, nonprofit credit counseling agencies typically offer free financial counseling and one-on-one budgeting help for distressed borrowers.

Be prepared to pay, though, if you choose to work with the agency on a debt management plan. For a fee, a credit counseling agency will negotiate with a credit card issuer on your behalf to try and secure a more affordable repayment or debt settlement plan.

To find a nonprofit credit counselor, check out the Financial Counseling Association of America, the National Foundation for Credit Counseling, or the Department of Justice’s list of approved credit counselors for borrowers filing for bankruptcy.

Choose a Debt Repayment Strategy 

If you’re fortunate enough to continue your debt payments during a recession or you want a repayment strategy once the downturn is over, two popular options exist: the debt snowball method and the debt avalanche method.

  • Debt snowball: Pay off the cards with the smallest balances first. Then use those small wins to help build psychological momentum––especially when your motivation is flagging. 
  • Debt avalanche: Pay off your cards starting with the balance that has the highest APR and working your way down from there. With this method, it may take longer to savor a win if your priciest cards have the highest balances. 

From a mathematical point-of-view, the debt avalanche method makes the most sense since you’ll free yourself from debt more quickly and pay less overall. But for this to work, you need to stick with the plan until you’ve paid off your last card.

If you struggle with motivation or get easily overwhelmed, the debt snowball method may be a better fit, despite the higher cost and slower repayment schedule.

Multiple studies have found that borrowers are often more likely to succeed with the debt snowball method than other debt repayment methods.

Bottom Line

Don’t give up if you’re feeling overwhelmed by bills you can’t afford to pay. There are a number of free resources available to help you navigate this stressful period and preserve your financial health as much as possible.

Drop your payments down to their minimum to preserve your cash, come up with a repayment strategy, explore refinancing options and, if you’re still struggling, search out payment relief options or credit counseling.