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What’s the Fastest Way to Bring Past Due Accounts Current?

I fell behind on a bunch of my credit cards because I lost my job a few months ago. I have a new job now, but I have no idea where to start with these credit cards. How do I decide how to set the right priorities to bring my accounts current?

George from Albany, NY

Hi, George,

Sorry to hear that you’ve been facing some challenges with your credit cards because of unemployment. It’s one of the most common reasons our clients give for why they’re having trouble with credit card debt. The good news is that there are steps you can take to catch up quickly, which I’ll outline for you now. If you have any questions, please give us a call at (844) 276-1544 to speak with a certified credit counselor so they can assist you directly.

5 steps to take to bring past-due accounts current

1. Check your statements

Look over your statements and note how much you owe, as well as the minimum required payment and the due date. Be aware that to bring the account current, you will need to pay all of the arrears (the full amount you’ve missed) and the current month’s payment. We have a worksheet that will help you track your credit card debt load.

I don’t know what your new income is, but review your budget to see if it would be possible to catch up quickly on all the accounts where you’re behind.

2. Contact your creditors

One of the worst mistakes you can make is not contacting your creditors. They may be willing to work with you, especially if you’ve been on time in the past prior to this period of unemployment. Explain to them how you got behind and what your situation is. Ask them what is the least amount they will take to bring the account current. They may be willing to bring the account current once you pay a certain percentage of the amount that’s past due. This is known as re-aging your account. It will stop late fees and reporting missed payments to the credit bureaus that damage your credit history.

3. Pay the minimums

Even if you can’t pay the entire past-due amount that you owe, make sure you make the minimum required payment by the payment due date. This will keep your accounts from falling further behind. So, if you’re 30 days behind already and you make the minimum payment, you will stay 30 days behind instead of falling to 60 days behind.

4. Avoid allowing accounts to fall past 60 days.

Keeping accounts from falling further behind is especially important for accounts that are 30 days behind for two reasons.

First, some credit card issuers will not report an account as past due to the credit bureaus until it is 60 days past due. So, you may be able to avoid the missed payments in your credit history. You can check your credit report to see if your creditors have already started to report missed payments to the credit bureaus. Currently, the credit bureaus are allowing consumers to download their reports for free once per week through So, take advantage of this and see how your accounts are being reported.

Even more importantly, keeping an account from falling 60 days past due may help you avoid penalty APR. This is the penalty interest rate that applies when your account has fallen behind, and it will be much higher than your regular rates. Penalty APR can make it much more difficult to catch up. And once it’s applied, you generally have to bring the account current and make six on-time payments to restore your original interest rates.

5. If you have multiple accounts that are behind, contact a credit counselor

If you have a single card that you are dealing with, then the steps above will help you bring the account current. When you have multiple accounts that are delinquent, you may need help from a nonprofit credit counseling agency.

You can call a certified credit counselor and enroll in a debt management program (DMP). This program will consolidate your accounts into one monthly payment, as well as minimize interest and remove penalties you’ve incurred on your past-due accounts.

What’s more, most creditors will agree to bring past-due accounts current after three consecutive payments on a DMP program. This means you can re-age all of your past-due accounts at once instead of bringing them up-to-date one at a time, which is what you’ll be doing on your own. You can stop credit damage much faster this way, and while you’re enrolled in the program, you will start building positive credit history on all your accounts with each on-time program payment you make.

Dangers of past-due accounts

  • Late fees – Most creditors will assess late fees if you are even one day late with your payment. Late fees can run up to $40 for the first time you miss a due date.
  • 0% canceled – If you have a promotional interest rate such as 0% APR for purchase and are late, the zero percent interest rate will be canceled.
  • Missed payments on your credit report – If the lender reports you for missed payment to the credit bureaus, that credit report notation can rapidly reduce your credit score. The further you fall behind, the faster your score will fall.
  • Penalty APR – When you fall more than 60 days behind with your payments, most creditors will apply penalty APR. These rates are much higher than regular purchase interest rates, averaging 29.99%.
  • Charge-offs – If you don’t communicate with your credit card companies and don’t pay anything, after 90 days to 120 days, the credit card company will close your account and charge it off. Then debt collectors will be pursuing you. A charge-off is when the credit card company has given up hope that you will pay and has closed the account. You will no longer be able to use the account, and it can get sold to a third-party collector. That will create a collection account on your credit report, which has even more serious consequences for your credit.

The cost of penalty APR on past-due accounts

You wind up paying a lot more when your interest rate goes up with penalty APR. Currently, the average credit card interest rate is around 16%. Penalty APR is typically 29.99% on most credit cards.

So what would happen if your rate on a $5,000 balance went up to 29.99% because you were 60 days behind?

With a starting balance of $5,000, the minimum payment requirement on many credit cards would be $150. At 16% APR, $66.67 of that minimum payment would cover accrued monthly interest charges. However, at 29% APR, $120.83 of that $150 payment goes to cover interest charges. So, it takes much longer to bring the account current because you will be spending so much just to cover those accrued monthly interest charges.

If you’re having trouble with past-due credit cards, we can help. Talk to a certified credit counselor today.

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