What is a Credit Card Hardship Program and Do You Qualify

What is a Credit Card Hardship Program and Do You Qualify theallbudget@gmail.com –

What is a credit card hardship program and do you qualify if you’re staring at your credit card bills and wondering how you’re going to make your minimum payments you likely have a problem there are plenty of unexpected circumstances that can make it difficult to pay your bills maybe you lose your job or there’s a pay cut to help your company stay afloat you might

Get in an accident and be unable to work fortunately some credit card companies offer a known benefit called a credit card hardship program that may be able to help it won’t wipe out your debt but it may give you a chance at getting through your financial difficulties what is a credit card hardship program credit card hardship programs are programs designed

To help you get through a rough financial patch there is no set terms for hardship programs they vary based on the institution offering the program that said there are some common benefits that may be offered as part of a credit card hardship program these programs may include some or all of the following benefits depending on your lender and situation a lower

Interest rate for a set time period waiving certain fees or penalties on your credit card offering a lower monthly payment or a fixed payment schedule avoiding further delinquency if you adhere to the terms of the program what credit card companies offer hardship programs credit card companies don’t typically advertise their hardship programs instead you usually

Have to call the customer service phone number then you can ask your card issuer if they offer a hardship plan some issuers do share some details about their program american express lists information on its website about its program discover does as well just because a credit card company doesn’t list details about their programs on their website doesn’t mean they

Don’t offer them other issuers have verified these programs exist at their companies as well some other companies that may offer programs include bank of america capital one u.s bank ultimately it is in your credit card company’s best interest to work with you by doing so they have a greater likelihood of getting paid back for that reason it always makes sense to

Call and ask for help the worst an issuer can say is no benefits using a hardship program may seem like a defeat but it can actually have many benefits stop debt from getting even more out of control by getting access to some of the benefits listed above you can work to fix your finances and your life situation they help by removing some of the aspects that could

Otherwise cause you to fall deeper into debt in particular lower interest rates and waived fees give you an opportunity to avoid a growing balance while getting through the hardship pay down debt faster hardship programs can also help you work toward paying off your debt faster without interest and fees accumulating more of your payments will go toward paying

Off the balance you owe avoid ruining your credit a hardship program can help you from falling into further credit issues as well by contacting the issuer early you may be able to avoid missed payments missed payments could have a very detrimental impact on your credit score drawbacks hardship programs aren’t all good though they have some significant drawbacks

That could temporarily make your life more difficult account suspension or closure when you enter a hardship program your credit card issuer may temporarily suspend your account or close it all together this means you may not be able to make new charges to the account while this may reduce your flexibility for making purchases it’s a good move for both you and

The issuer in most cases the issuer doesn’t want you to get further into debt you can’t afford to repay negative impact on credit these actions can hurt you in another way too a credit card hardship program could affect your credit score or future borrowing decisions if your issuer suspends or closes your account it can hurt your score in several ways closing

The account could hurt your credit utilization ratio length of credit history credit mix in particular your credit utilization is a large part of your credit score by closing an account your credit limits will decrease while the debt will still be owed this increases your utilization ratio which can hurt your score that said taking these actions before you make

Late payments could be a blessing in disguise even with these other potentially negative impacts payment history is the largest portion of your fico credit score so avoiding late payments is a big deal your issuer may also put a note on your credit report at the credit bureaus stating you’re in a hardship program while a note won’t hurt your credit score it could

Cause other lenders to be more cautious when you apply for new credit how to qualify for a hardship program to qualify for a hardship program you must be facing a legitimate hardship examples of common hardships that may qualify include job loss pay cuts divorce the inability to work temporarily significant medical issues natural disasters such as hurricanes be

Ready to provide documentation showing you’re facing the hardship you’re claiming look credit card companies often want to make sure you’re actually facing hardship and not trying to get a break on your credit card bills the earlier you contact your credit card issuer about a hardship program the better off you’ll generally be before you contact your credit card

Company you should be ready to show them you’re serious about the hardship you’re facing one way to do this is by entering the conversation prepared take an honest look at your finances and figure out how you’re going to make them work this often includes coming up with a budget look for areas where you can cut back your expenses to help you make payments on

Your credit cards if you come to the credit card company with a potential solution that could allow you to continue making payments you may have a better shot of getting access to a hardship program by recognizing the financial issues early lenders can often help you figure out a solution before it’s too late this also helps the lenders have the best chances of

Getting paid back it’s in the best interests of all parties involved other options to consider financial hardship programs aren’t your only option in fact they’re usually a short-term solution if you need a long-term answer to your financial problems you may want to consider other options there are a handful of other solutions that may be a better fit depending

On your circumstances as you’d expect they all have different pros and cons balance transfers in some cases an introductory 0 apr balance transfer credit card offer may be able to hold you over until your financial emergency passes usually you may have to pay a fee to transfer your balance some credit cards will waive this fee for an introductory period then you

May be subject to even higher interest rates if you don’t pay your balance off before the introductory 0 apr expires those that can’t manage credit cards well might be better off closing their credit cards by doing this you won’t rack up any additional debt personal loans you can then pay the credit cards off by taking out a personal loan which will have a set

Repayment period and pre-determined interest rate of course a hardship program may be better than this if it offers lower interest rates than the personal loans you could qualify for debt management debt management plans offered by nonprofit credit counseling agencies may be able to help too debt management plans often help people work with multiple credit card

Companies at the same time you may have to pay a fee for their services though and you can often do the same thing yourself however the process can be overwhelming for some people in these cases a debt management plan may be helpful to you bankruptcy if your finances are truly out of control and you won’t be able to recover you may want to consider bankruptcy

Bankruptcy is a very serious action so consult with professionals you trust to see if it is the best option for you as a general rule of thumb you should go over all other options before you seriously consider filing bankruptcy do what’s best for your situation if you’re facing financial difficulties a credit card hardship program may be able to help before you

Ask your issuer if a program exists carefully consider your finances and how you’ll be able to make a hardship plan work for you if the issuer doesn’t offer a hardship program or their offer won’t be enough to help solve your problems consider your other alternatives as always it makes sense to compare all of your options to find the best solution for your situation you

Transcribed from video
What is a Credit Card Hardship Program and Do You Qualify By TheAllbudget