In recent months several leading credit card companies have responded to the financial stress caused by the COVID-19 pandemic by publicly announcing their efforts to help customers manage their credit card debt. Credit card companies are no stranger to their borrowers’ hardship due to broader economic challenges, and they want to make sure they retain and continue to generate profit from their customers in the form of interest payments and fees.
What exactly are they offering borrowers as an incentive to keep them from settling their debt during these difficult times? Credit card hardship programs. And while this sounds like a promising initiative, the reality is that the majority of hardship programs are often accompanied by several rules and restrictions that ultimately benefit the credit card company and not the customer.
First, let’s review what credit card hardship programs have to offer.
Credit Card Hardship Program Overview
Hardship programs are a financial offering made by credit card companies to individuals experiencing difficulty making their monthly payments on time. Typically, the relief offered can include one or more of the following benefits: a reduced interest rate, lower monthly payments, or the ability to defer on your payments entirely.
Doesn’t sound too bad, right? But wait – this is where those rules and restrictions we mentioned earlier come in to play.
Your Relief is Only Temporary
During times of financial strain, having your monthly credit card payment lowered can certainly be helpful. Unfortunately, this relief is only temporary, as most agreements typically last between 3-12 months. Once your hardship program agreement is up, you’ll be right back to making your original payments.
You’ll Continue to Accrue Interest
If your credit card provider agrees to place your monthly payments “on hold,” it’s important to remember that your card will continue to accrue interest during your time of payment absence. When your payments do eventually resume, you’ll face a significantly larger balance than you started your hardship program with.
Now that you have a better understanding of credit card hardship programs and the associated risks, you may be wondering how debt settlement will work to benefit you.
Debt Settlement as an Alternate Approach
While credit card hardship programs may prove beneficial for some, they’re certainly not for everyone. Individuals who find themselves dealing with debts greater than $10,000 may find that enrolling in a debt settlement program serves as a more viable financial option, saving them potentially thousands of dollars.
Why don’t credit card companies want you to know this? It’s simple! By settling your debt with your credit card company, you break the cycle of minimum payments. The longer you stay in debt, the more interest and fees credit card companies can charge—and the more money they make.
Working with a credible debt settlement company, such as ACCS, makes it easier for individuals with $10,000 or more in credit card debt to regain control of their financial situation. Our debt relief representatives start by analyzing your entire financial picture to provide a customized debt repayment plan that includes an affordable monthly payment. Once enrolled in the program, our specialists use their experience and established creditor relationships to negotiate on your behalf and settle your credit card debt for less than owed.
This approach allows you to pay off your creditors in a financially manageable way—having one payment to focus on means you’ll be able to set a realistic timeframe for your financial goals.
To learn more about our debt settlement program and whether it’s right for you, contact us today. Our debt specialists are here to help with the financial guidance and support you need. Get started today by requesting your Custom Debt Relief Plan. With no cost or obligation, you have nothing to lose!