What Is a Credit Card Hardship Program?
- June 1, 2019
A Credit Card Hardship Program is a payment plan, negotiated via your issuer, that may temporarily lower interest and waive fees when a difficult circumstance hinders your ability to pay.
Financial emergencies, setbacks and major life changes can come at you quickly, making it difficult to meet monthly financial obligations like credit card payments.
Before you fall behind, you can pick up the phone and ask your card issuer for help. Many lenders offer access to a credit card hardship program that can provide assistance to those who are struggling with circumstances beyond their control.
Steps for getting into a hardship program
The steps for enrolling in a credit card hardship program may vary depending on your issuer, but here’s a brief outline of how to approach the process:
1. Get a grasp on your new budget
Before contacting your card issuer, make sure you understand the financial impact of your hardship, says Katie Bossler, a certified counselor at GreenPath, a nonprofit credit counseling agency that helps cardholders navigate their financial options, which may include hardship programs. That means building a budget based on your new reality: for example, your lower monthly income (due to a pay cut or illness) versus your expenses and bills.
If your issuer offers a hardship program, your revamped budget can help you better explain your circumstances to that lender as you negotiate. In some cases, an updated budget might even be a prerequisite for enrolling in a plan. If your issuer does not offer a hardship program, you’ve at least taken a key first step toward getting your finances under control.
2. Call your issuer
Now that you have a good idea of how your hardship will affect your ability to pay, your next step is to call the number on the back of your card. Your issuer may not offer a hardship program at all, but the only way to know for sure is to ask the representative. Be prepared to spend time being transferred or placed on hold, but remain polite and respectful. Remember: You’re asking the bank for a favor.
Once you reach the right department or representative, be clear and honest about your situation and your needs, based on your new budget. Explain that you want to be able to fulfill your payment obligation, but that you’re struggling at the moment and need assistance. If you have a long history of making on-time payments, the issuer may be more willing to work with you on a payment plan.
3. Agree only to terms you can afford
Don’t accept new terms just because your issuer offers a lower interest rate than what you’re paying now. Make sure it’s a rate you can actually afford. And if you share household expenses with a partner, consult that person, too.
“When someone is in these hardships, we’re not always thinking clearly and we might jump to whatever the creditor is offering without understanding fully what it is,” Bossler says. Depending on the issuer, failing to meet new terms by, say, missing a payment may cancel the arrangement, she notes.
If the new interest rate or timetable doesn’t work, you can attempt to keep the negotiation going. Ultimately, though, you don’t have to accept a deal.
Read the entire article here on the Nerd Wallet website.
GreenPath is Here to Help
At GreenPath Financial Wellness, we are working to make it easier for everyone to achieve financial health. We can help you gain a better understanding of your spending habits, and we can help you create a plan to pay off your credit card debt. Our financial coaches are kind and caring. We can help you understand your finances and make a plan to meet your goals. It’s free, confidential and no pressure!