Credit Card Hardship Programs

Having a hard time paying your credit card bills on time?
You might consider enrolling your account in credit card hardship programs that are available in all major credit card companies in the United States. What exactly are credit card hardship programs? What makes them a great help to consumers who are having a difficult time with their finances? Should they be considered the first choice in times like these or the last? The answers to these questions are in the following paragraphs.

Basically, credit card hardship programs are contracts or agreements between credit card holders and their respective credit card companies. This agreement allows the cardholder to customize a payment arrangement for his or her bills which now has reduced APRs and lower minimum monthly payments, thanks to the credit card company.

Credit card hardship programs are different from a “Payment Protection Plan” that you often see advertised on credit cards. The latter is a type of insurance that gives the cardholder supplementary income during major difficulties such as unpaid leaves or a job loss. This plan is only available for a limited period of time, usually a maximum of 12 months.

Are credit card hardship programs a better deal than missing on payments, or aren’t they? The first thing that you should remember is that it is a payment plan and not a debt reduction agreement. Your debt isn’t likely to be reduced by your bank. They still want to get everything you owe them but in a more convenient way for you. The only event that they will likely agree to a debt reduction agreement is when they know you are bound for bankruptcy. Usually, banks settle for an agreed amount instead of risking not receiving any amount from an indebted cardholder.

Credit card hardship programs are only given to cardholders who have extended their credit limits way beyond their means or those who have faced financial difficulties due to illness, disability, death, divorce, or job loss. Since they are considered the last option, credit card hardship programs are not openly publicized by credit card issuers. Cardholders who want to take responsibility for themselves are assumed to do their own research about their company’s hardship program. They will need to call their issuer in order to ask about the program and face an eligibility process to assess their eligibility.

However, every plan has its downside. According to some experts, credit card hardship programs will not really be able to lower interest rates in a significant level. What other companies may do is lower your credit limit. They may even cancel your credit card account to help you manage your debt. Besides, being in this program will also dent your credit score and rating.

What experts say about credit card hardship programs is that they shouldn’t be your first choice. There are other options available including credit counseling or raising your income.


Source: Credit Cards For Peopie With Bad Credit Rating

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