Credit Card Hardship Programs: How they Work, How to Qualify – Creditcards.com
- June 1, 2020
From creditcards.com, Jeffrey Arevalo, financial expert at GreenPath Financial Wellness, provides details about credit card hardship programs.
Credit card hardship programs are designed to help consumers through a tough financial time, with protections for anyone who might otherwise default.
To figure out what steps to take, it is useful to understand how credit card hardship programs work, how to qualify and what other options are available.
For those facing income loss as a result of the coronavirus pandemic, impacted by a natural disaster, or facing other financial changes, a credit card hardship program might offer some relief in making payments.
This option is particularly useful at this time. From mid-March to mid-May 2020, approximately 38 million Americans filed for unemployment benefits because of the coronavirus and state-mandated lockdowns.
“The sooner you can get help options in place, the better prepared you’ll be when we get out of this,” adds Jeff Arevalo, a financial wellness expert at GreenPath Financial Wellness, a nonprofit consumer credit counseling service.
What is a credit card hardship program?
Credit card hardship programs are designed to help consumers through a tough financial time, without defaulting on their credit cards.
Typically, a credit card company might charge a late fee of up to $40. Late payments will also accrue additional interest, with the average credit card interest rate currently just above 16%.
These factors can contribute to falling behind in payments.
That’s where a credit card hardship program can come in.
Who can qualify for a credit card hardship program?
“It’s up to a credit card issuer’s discretion” if you can take part in a hardship program, Arevalo says.
“Be honest and tell them what happened,” he says.
GreenPath Financial Wellness suggests that those needing options can contact their credit card issuer directly and ask about its hardship program. Another powerful option is to turn to a nonprofit consumer credit counseling program for assistance.
While anyone can request to take part in a hardship program, credit card issuers may be more likely to grant the request to someone who has a healthy credit report history.
In these weeks and months of the pandemic crisis, many who call credit card issuers face long wait times on the phone.
In more normal times, if a consumer contacted a card issuer directly, they were likely to be turned down on their first request. It often took getting a supervisor involved to be approved.
Though it is difficult to predict what will happen in the upcoming months, many card issuers now offer relief to cardholders. Card issuers are streamlining their assistance programs as the COVID-19 pandemic continues to impact the U.S. economy.
In previous years, a card holder would be required to reach out to their card’s contact center – which they can still do. However, given the need at this time many credit card issuers now offer a simpler process for people to request deferrals online for mortgage, credit card, small business and auto loans. GreenPath can help people navigate through these options.
What other options are there?
If you have concerns about your financial situation, Arevalo suggests contacting a nonprofit consumer credit counseling agency such as GreenPath, which can help you prioritize expenses and help you determine if there are areas where you might be able to cut expenses, such as gym memberships and cable bills.
“It doesn’t have to be permanent,” Arevalo says.
Borrowers shouldn’t hesitate to seek out other sources of assistance. This might include special unemployment or other benefits from government programs, many of which will only be offered for a set period of time.
The article goes on to recommend contacting a nonprofit consumer credit counseling organization “sooner rather than later.”
Those who might be wondering if a credit card hardship is the right step should consider contacting GreenPath for a conversation about debt management.
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Jeff Arevalo is a Financial Wellness Expert and has been with the Greenpath since 2006. He possesses a strong passion for helping others and takes great pride in providing strong financial education and effective money management tools to help make a difference in people’s lives. Jeff and his wife recently welcomed a baby boy to their family and are excited to navigate the world of parenthood for the first time.