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What is a Credit Card Hardship Program and Do You Qualify?

Find out which credit card issuers offer credit card hardship programs and learn how to qualify and prove financial hardship to help manage your debt.

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 little 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 altogether.

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 predetermined 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.