Credit card companies are not famous for their sympathy. However, if you are among the millions of Americans facing financial difficulties due to COVID-19 and seeking help for credit card debt, you should know that credit card companies are willing to help.
Most credit card companies have always had “hardship” programs for folks that were having trouble paying their bills. Until the pandemic hit, they were kind of a little-known secret. Now, with so many people in financial straits, the issuing banks are promoting their hardship options.
The programs include things like waiving late-fees, deferring payments, and reducing interest rates. There is a catch, though. Not all cardholders will qualify for the program. If you can prove the coronavirus has impacted your income, you can ask your issuer for help.
As long as your debt is not huge, and it seems like you can pay it off over a reasonable amount of time, you should be good to go with your card company’s internal hardship program. Terms vary by issuer, and relief is generally granted on a case-by-case basis. To determine your eligibility, you must contact your card issuer.
Help for large credit card debt
If you have large debt with multiple cards, you might be better off seeking a third-party debt management counselor. If your credit card company has denied you access to a hardship payment plan, or if you cannot make the terms that they offered, a credit counselor may be able to provide options for help with credit card debt. These may include a debt management plan, which rolls several balances into a single payment at a lower interest rate.
“It essentially works as a consolidation loan without creating a new loan,” says Thomas Nitzsche, a spokesperson for Money Management International, a nonprofit credit counseling agency.
Debt management plans are better suited for long-term debt that can take up to five years to pay. You can consolidate different balances like unsecured loans, certain kinds of medical debt, and credit cards into one payment at a fixed rate, according to Nitzsche.
Also, debt management plans usually involve fees, which can vary based on factors. But fees may be negotiable, and your savings will typically outweigh the cost.
Have you, or anyone you know sought debt assistance due to COVID-19? Can you share the details below?