Crisis Leave You Unable to Pay? Credit Card Hardship Programs Can Help

A daughter kisses her elderly mother on the forehead.
Getty Images

Asking for help can be hard.

But when you’re faced with a tragedy — like an unexpected illness, divorce or just a surprise expense (think: your home’s HVAC died this morning) — refusing to admit you need help could hurt more in the long run. 

That’s especially true if the assistance could prevent you from spiraling into a debt abyss — and it’s why a credit card hardship program could be a lifesaver. 

Never heard of such a program? That’s not a surprise — credit card companies don’t typically advertise that you can adjust your payment plan or even stop paying your bill for a while. But we have the inside scoop on how this program could help you when times get tough. 

What Is a Credit Card Hardship Program?

A hardship program is a payment plan for your credit card — albeit one that’s probably more forgiving than your current payment schedule. 

But hardship programs can vary depending on the issuer and even within the credit card company, according to Brent Weiss, CFP and Chief Evangelist of Facet Wealth.

The best way to find out your issuer’s exact program is by calling customer service and speaking to a representative.

Pro Tip

Depending on the credit card issuer, the first customer service rep you reach may not be able to help, in which case you should ask to speak to the hardship or payment assistance department.

But before you decide to call your credit card company, you should know that while it can help, enrolling in a program could also do more harm than good if you’re not aware of the details.

Here’s what you need to know about the benefits and pitfalls of credit card hardship programs — and how to enroll.

How a Credit Card Hardship Program Can Help You

The best time to use a hardship program is when you are facing a temporary money issue with a definite end in sight. 

If you have to take a leave of absence from work to care for a family member, for instance, you might not be able to make the monthly minimum payment on your credit card — but you should have a plan for returning to work so you can resume your payments.

“If you’re unable to make the payments, going into a credit hardship program or a payment plan could be a better solution than falling into a spiraling debt issue of not making payments for five, six, nine, 12 months, which would impact your credit score more adversely,” Weiss said.

So how can a hardship program help? Weiss explained that there are five possible adjustments that the credit card company can make:

    The best way to find out what’s available is to call your credit card company to prepare an explanation for why you need the program, how long you estimate you’ll need it for and how the program could help. 

    “Go in armed with a couple questions and say, ‘I want to be honest with you: Here’s my situation,’” Weiss said. 

    How Do You Apply for a Hardship Program?

    Although a credit card company rep may be sympathetic to your circumstances, credit card companies will also use cold, hard facts when deciding your eligibility for a hardship program.

    There are three main factors that your lender will use to determine if you qualify, according to Weiss:

    1. How long you’ve been a customer.

      The company will be more inclined to help a loyal (paying) customer of 20 years than someone who opened an account two months ago.

    2. Your payment history with the company

      If you call to report financial hardships on a regular basis or regularly miss payments, the company may be less inclined to let you enter a hardship program.

    3. Your credit score.

      Credit cards have to ask themselves, “Is this someone who could realistically repay the debt eventually?”

    And the best time to call your credit card company about a hardship program? Before you need it.

    “Say, ‘I believe I’m going to have trouble making my minimum payments in the months ahead,’” said Weiss, who acknowledged that calling ahead isn’t always practical advice if the situation is an emergency. 

    But if possible, it’s a good way to let your credit card company know you’re being proactive — even if the company isn’t.

    “Some credit card companies won’t let you go into a hardship program until you’ve missed a payment,” Weiss said. “But most would help if you called and talked to a human being.”

    What Are the Alternatives to Credit Card Hardship Programs?

    Hardship programs are not a Get Out of Jail (or Debt) Free card, and the consequences could potentially be worse than the benefit if you’re not committed to returning to your former payment schedule.

    For one, your credit card company will likely report your entrance into the hardship program to the credit bureaus, which could damage your credit score in the short term.

    But if you’re certain you can make the smaller payments and emerge from the hardship program at the end of the term, the program could actually help you prove a history of on-time payments, according to Weiss.

    “Long term… you’ll probably have a healthier credit score because you’ve made those payments consistently,” Weiss said.

    A hardship program is also unlikely to be of much help if there are multiple lenders you know you can’t pay.

    “It’s not a good solution for someone who has several outstanding credit cards,” he said. “That’s when a debt management plan might make more sense because you have to negotiate a lot of different terms and contracts and someone can help you with that.”

    And while you can set up debt management plan by finding a reputable credit counselor, Weiss cautioned that you should ask the company about fees upfront before disclosing any financial information.

    If you’re certain your financial circumstances are temporary and short-term (less than 12 months), another option is applying for a credit card that offers a no- or low-fee balance transfer and 0% interest for a specified period (like, say, 12 months).

    “If it’s a known period, it actually could be a better solution than either missing payments or going into a hardship program where the credit card company reports it to the bureaus,” said Weiss. But he warned that a balance transfer only helps if you can pay off the full amount before the interest starts accumulating again.

    And if you do have some time to prepare before the hardship hits, consider taking out a personal loan with better terms to pay off high-interest credit cards.

    “But the trick is, qualifying for new debt is different than being eligible for a hardship program, so they’re going to look at your credit history, your credit score, your payment history,” Weiss said. “And if you’ve missed a payment or two already, that actually could be difficult to get.” 

    The best idea? Dig into the source of your debts so you can prevent the problem instead of having to find a solution, according to Weiss. A financial adviser could be worth the investment and help you solve the issue without ever having to resort to a hardship program. 

    Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.