How to Ask Your Card Company for a Hardship Plan

If a job loss, illness, divorce or other setback has made your credit card payments hard to manage, one of the most useful calls you can make is to your card company. Many have hardship programs, and you don’t need a company or a fee to ask for one.

What a hardship plan is

According to the CFPB, card companies offer programs, sometimes called hardship, forbearance or loss mitigation programs, that may let you:

• Pay a lower monthly payment for a set time.
• Get a reduced interest rate while you’re in the program.
• Postpone a set number of payments.
• Have some fees waived.

What’s offered depends on the company, your income, what you can afford and how much you owe. Some plans last a few months; some are longer.

Call before you fall behind

The CFPB says you don’t need to be behind on your payments to ask for help. Calling as soon as you know you’ll struggle can keep your account in good standing and may give you more options than after you’ve missed payments. If you’ve already missed one, call anyway.

Before you call

Get a few things ready:

• Your numbers. Your income, essential expenses and what you can realistically pay each month. A bare-bones budget helps.
• What happened. A short, honest explanation: reduced hours, medical bills, a family emergency.
• When things might improve, if you know.
• A pen and paper to note names, dates and what’s agreed.

What to say

Keep it simple. For example:

“I’m calling because I’m having a financial hardship. My hours were cut and I can’t afford my full payment right now. I can pay about $60 a month. Do you have a hardship program, a lower interest rate or a payment plan that could help?”

If the first person can’t help, politely ask whether there’s a department that handles hardship or payment assistance.

Questions to ask

• What are the terms: new payment, interest rate and how long it lasts?
• Will my card be frozen or closed during the program?
• What happens when the program ends?
• How will the program be reported to the credit bureaus?
• Will late fees or penalty interest be waived or reversed?
• What happens if I miss a payment during the program?

Get it in writing

The CFPB recommends getting written confirmation of any repayment option you agree to. Ask for it by mail or email, and save it. Then set up automatic payments for the new amount so you don’t miss one.

How it may affect your credit and card

• Many companies close or freeze the card while you’re in a hardship plan.
• A closed card can raise your credit utilization. See what is credit utilization.
• The company may add a note to your account on your credit report. Ask how it reports the plan.
• Making every payment on the plan is far better for your credit than missing payments. Read what happens if you stop paying your credit cards.

Watch out for look-alikes

Your card company won’t charge you a fee to join its own hardship program. Be wary of unexpected calls offering to “lower your credit card interest rate” for a fee. The FTC warns consumers to say no to those offers. Call the number on the back of your card instead. See 7 signs a debt relief company is a scam.

If your card company says no

• Ask again later, or ask whether a different program is available.
• Talk to a nonprofit credit counselor through the NFCC. A debt management plan may get you lower rates across several cards.
• Focus extra money on one card at a time with the debt avalanche or snowball.

The bottom line

A hardship plan can give you breathing room without a third party or a fee. Call early, be honest about what you can pay, ask how it affects your account and credit, and get the deal in writing.

Sources: CFPB: start with your credit card company · FTC: say “no, thanks” to unexpected offers to lower your credit card interest rate · NFCC