What Hardship Programs Are
A credit card hardship program is an arrangement between you and your card issuer that temporarily modifies your account terms because of financial difficulty. They go by many names -- financial hardship program, payment assistance plan, credit counseling plan, workout agreement.
These are not publicly advertised. You have to call and ask. The number is on the back of your card.
What They Typically Offer
- Reduced interest rate: Often 0-5% APR for 6-12 months (down from 20-30%)
- Lower minimum payment: May be reduced by 25-50%
- Fee waivers: Late fees, over-limit fees, and penalty APR may be waived
- Account freeze: Your card is closed to new purchases
- Fixed repayment term: Some programs set a 12-60 month payoff schedule
What Hardship Programs Do NOT Offer
Hardship programs rarely reduce the principal balance. You still owe the full amount. The program just makes the payments more manageable by lowering the interest rate and fees.
- They do not forgive any portion of your debt
- They do not stop lawsuits if a creditor decides to sue
- They do not stop wage garnishment if a judgment already exists
- They do not prevent the account from being reported as modified or restricted on your credit report
- They are temporary -- once the program ends, regular terms resume on any remaining balance
Major Issuer Programs
| Issuer | Program Name | Typical Terms | How to Apply |
|---|---|---|---|
| Chase | Payment Assistance | Reduced APR, lower min payment, 6-12 mo | Call 800-935-9935 |
| Capital One | Financial Hardship | Deferred payments or reduced APR | Call 800-227-4825 |
| Citi | Flexible Payment Plan | 0% APR for 6-12 mo, fixed payments | Call 800-950-5114 |
| Discover | Payment Protection | Reduced min payment, rate reduction | Call 800-347-2683 |
| Bank of America | Customer Assistance | Rate reduction, payment modification | Call 800-732-9194 |
| American Express | Financial Relief | Reduced APR, extended terms | Call 866-703-4169 |
Programs and phone numbers may change. Call the number on the back of your specific card for the most current information.
How to Apply
- Call the issuer directly. Ask for the "hardship department" or "financial assistance." Do not use a third-party company for this -- they cannot do anything you cannot do yourself for free.
- Explain your situation honestly. Job loss, medical emergency, divorce, reduced hours, or other documented hardship. Be specific about what happened and when.
- Ask what programs are available. There may be more than one option. Ask about each and get the specific terms in writing before agreeing.
- Get everything in writing. Before making any payment under the new terms, get a written confirmation of the modified terms.
- Keep making payments. Missing payments during the hardship program may cause it to be cancelled and your original terms reinstated.
When Hardship Programs Are Not Enough
Hardship programs work best when your financial difficulty is temporary and you can realistically pay off the full balance at a reduced rate. They are less useful when:
- You have debt with multiple creditors (each must be contacted separately)
- The total debt exceeds what you can repay even at 0% interest
- Your income reduction is permanent, not temporary
- You are already being sued or garnished
- The program period is too short to make a meaningful dent
In these situations, settlement or bankruptcy may be more appropriate options.
Hardship Programs vs. Credit Counseling
Nonprofit credit counseling agencies (like those approved by the DOJ for bankruptcy) offer Debt Management Plans (DMPs) that work similarly to hardship programs but with some differences:
- A DMP consolidates all your credit card payments into one monthly payment
- The agency negotiates reduced rates with all your creditors at once
- Monthly fees are typically $25-50
- Plans usually run 3-5 years
- All enrolled accounts are closed
Credit counseling can be a useful middle ground, but like hardship programs, it does not reduce the principal balance.