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Guide to Credit Card Hardship Programs

Guide to Credit Card Hardship Programs
Jason Steele
Jason SteeleUpdated August 16, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you are facing economic challenges, you might want to contact your credit card provider and ask if they would be willing to work with you and give you a bit of a break. Though not widely advertised, many credit card companies actually offer hardship programs designed to provide assistance to cardholders who are struggling with circumstances that are beyond their control. If you are able to qualify, the issuer might reduce your payments so that you can recover while keeping your account in good standing.Not all credit card providers offer hardship programs, however, and using one can still have some negative consequences on your account. Here’s what you need to know about credit card hardship programs, how they work, and when you may want to apply for one.  

What Is a Credit Card Hardship Program?

A credit card hardship program, also sometimes referred to as an “assistance program” or a “hardship case,” is a payment plan that you negotiate with your card's issuing bank. Generally, a credit card provider would prefer you make some payments rather than default on your debt. Hardship programs are designed to help you do that. The terms will vary depending on the financial institution, the circumstances of your hardship, and the deal you agree to, but may include lowering your interest rate or payments and/or waiving fees for a certain period of time. 

What Is Involved in a Hardship Program?

Credit card issuers typically don't have a prescribed “hardship program” that’s detailed on their website or laid out in the card’s terms and conditions. It is actually usually up to you as a cardholder to be proactive, reach out to the issuer, and explain your situation. If you are forthcoming about your circumstances and demonstrate a desire to pay, it’s in their best interest to work with you. A typical hardship program might include benefits such as:
  • Temporary reduction in your interest rate
  • Deferred payment
  • Waived fees
  • A fixed payment schedule to pay off credit card debt
  • A smaller minimum payment

Who Needs a Credit Card Hardship Program?

While pretty much anyone would enjoy having a lower credit card interest rate, a reduced monthly payment, and/or waived fees, card issuers reserve hardship programs for people who are facing significant financial problems that are largely beyond their control, such as a job loss, serious illness, divorce, or family emergency.

Applying for a Credit Card Hardship Program

Credit card hardship programs don’t typically have a formal application, like the one you completed to apply for your credit card account. Typically, you must call your card issuer and ask if they offer any type of credit card hardship or forbearance program.When you call, you’ll want to be prepared to explain the circumstances that are affecting your ability to pay your credit card bills, how long you expect this situation is likely to last, and how much you can afford to pay each month. Your credit card company will consider a number of factors, including your current income and how much you owe, to decide if they will offer you a payment plan to reduce your credit card debt and, if so, what type of plan.You’ll have the best chance of success if you act early, ideally before you miss a payment and have a delinquency on the account. This shows the issuer that you are committed to paying. Once you miss a payment, the issuer may consider you delinquent. If you miss two payments, they may impose a higher interest rate, which could put you further in the hole. The sooner you ask for the help, the better standing your account will be in when the representatives consider your case.

Circumstances That Qualify You for a Hardship Program

Every hardship is assessed on a case-by-case basis. Some examples of situations that may allow you to qualify for assistance include: 
  • A job loss
  • A pay cut
  • A serious illness
  • A family emergency
  • A divorce
  • A natural disaster

Steps for Getting Into a Hardship Program

While you can’t simply fill out an online hardship application form, requesting assistance isn’t difficult. Here are some simple steps you can take.

1. Take stock of your budget

When you’ve experienced a serious financial setback, it can be a good idea to reevaluate your budget based on your new circumstances. This entails looking at everything that is coming in and going out each month, seeing where you may be able to cut back, and devising a spending plan that includes paying off debt. This will let you know what you can realistically pay toward your credit card balance each month.

2. Contact the card issuer

Once you’ve re-evaluated your finances, the next step is to contact the card issuer   and ask if they offer any type of hardship or payment assistance program. Once you get to the right representative, you can explain what your circumstances are and ask if there’s anything that they can do to help you continue to make your payments while you recover financially.

3. Only Agree to Terms You Can Afford

Resist the urge to agree to any concession, such as a reduction in interest rate. Try to continue negotiating until the issuer offers a payment plan you can afford. If the payments in a hardship program are still too high, you could end up defaulting on the debt, and, having once made an accommodation, the card issuer may not do so again.

What to Consider Before Agreeing to a Financial Hardship Plan

Here are some things to keep in mind when negotiating with a card issuer about a hardship program.
  • Make as strong a case as you can. Gather and submit as much relevant documentation as possible about your financial situation. This might include pay stubs, bank statements, medical bills, divorce papers, or any proof of financial hardship you can provide.
  • Make sure you understand all of the terms of the deal. Will payments automatically be debited from your bank account? Are you expected to work with a credit counselor? What would cause you to be expelled from the program?
  • Find how the plan will affect your ability to use your credit card. It’s a good idea to find out if the issuer is planning to temporarily freeze your card so you can't use it, reduce your credit limit, or close the account.

Do Credit Card Hardship Programs Affect Your Credit?

The credit card issuer may report to the consumer credit bureaus that your account is in forbearance or in a deferred payment plan. However, that should not negatively impact your scores. In fact, this status is preferable to missing payments and having the issuer report a delinquency to the credit bureaus, which can adversely impact your credit.If the issuer closes your account, however, it could negatively impact your credit by reducing your total available credit and, if it was an older account, reducing the average age of your accounts. Even if the issuer simply reduces your credit limit, that can have a negative impact on your credit by reducing the total amount of available credit. Ultimately, though, a credit hardship program can have a net positive impact on your credit profile, since it could enable you to make regular, on-time bill payments and not go into default.Recommended: What Is Considered an Average Credit Score? 

Possible Drawbacks of a Credit Card Hardship Program

While credit card hardship programs can offer much-needed relief to some cardholders, there are some potential drawbacks. Here are a few to consider.
  • It can take some time and effort to prove your hardship to the card issuer.
  • The issuer may require you to meet with a credit counselor or complete a debt management program.
  • The card issuer could close your account or lower your credit limit, which could negatively impact your credit and give you less flexibility in using credit to make purchases.

Alternatives to a Credit Card Hardship Program

If you don’t think a credit card hardship program is the right path for you, you may want to consider one of these alternatives. 

Balance Transfer Credit Card

If your credit is good, you may be able to transfer debt from a high-interest credit card to a low- or no-interest credit card. While there is often a 3% to 5% balance transfer fee, it could still be worth doing, especially if you are able to get a balance transfer credit card that has a lengthy introductory 0% annual percentage rate (APR). 

Debt Consolidation Loans for Multiple Credit Cards

If your debt is spread across multiple credit cards and your credit is good, you may want to consider consolidating your credit card debt with a consolidation loan. This involves taking out an unsecured personal loan from a credit union, bank, or online lender, and using it to pay off all of your credit cards so that you are then left with a single monthly payment and, ideally, a lower interest rate.

Debt Management Plan

Debt management plans are offered by nonprofit credit counseling agencies, and can help you get lower interest rates and waived fees. While you typically have to pay a fee for this service, you don’t have to worry about negotiating credit card debt yourself. The counselor will do this work for you. You then make a monthly payment to the agency, and they pay the credit card companies. It’s worth noting that this is different from credit card debt forgiveness, which is when a credit card issuer agrees to forgive all or part of your outstanding balance. While that may sound like a great deal, it can have serious consequences to your credit history and credit scores.

The Takeaway

When you’re having a hard time making your credit card payments, a credit hardship program may offer just the solution you’re looking for. Each card issuer has different requirements for enrollment in a hardship program, and there is no guarantee you will qualify. But if you’ve been a good customer thus far and you reach out to the company before you miss payments, you can increase the chances they will work with you. Hardship programs aren’t the only option for getting back on track, however. You might also consider getting a balance transfer credit card with an attractive introductory rate. Balance transfer credit cards provide the opportunity to take a break from interest charges while you pay down your existing balances. Lantern by SoFi makes it easy to compare credits so you can see how your options stack up.

Frequently Asked Questions

What is a hardship program for credit cards?
Does credit card debt count as hardship?
How can I break my credit card debt for free?
Does a hardship plan work for everybody?
Photo credit: iStock/MicroStockHub

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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