Financial emergencies, setbacks and major life changes can come at you quickly, making it difficult to meet financial obligations, like credit card payments. Before you fall behind, you can pick up the phone and ask your card issuer for help. Here’s what you need to know.
Where to Find Them
Many of the major banks have some form of a hardship program to help you avoid problems if your financial situation changes. Most give you several options to reduce or erase your debts completely. Here are the most common solutions.
Debt Consolidation
Consolidating your debts means that you can convert your debt into a temporary loan that can provide you more time to earn the money you need to potentially pay of your debt in full. These can come in the form of either a consolidation loan or opening a line of credit, which you can repay gradually as you use it.
To get started, book an appointment with your bank and sit down with a credit card advisor. They will look at your credit card history, whether or not you met the deadlines for payment due in previous months and discuss a good plan of action to help you eliminate your debt in the easiest, fastest way possible.
With consolidation you can request your advisor to implement one of these three credit relief options: lower your interest rate on your current credit card or open a new credit card with a pre-existing low interest rate. You can transfer your balance from your old high-interest credit cards onto new credit cards that substantially reduce the amount of interest you’ll have to pay. This can usually save you a lot of money. Be careful though. Too many people keep charging after they make these deals and wind up even deeper in debt.
Work out A Payment Plan
If you’ve missed or temporarily cannot make bill payments due to circumstances outside your control you can work with your advisor to create the best repayment plan for you to make payments more manageable, taking into consideration your monthly income.
The other method of taking this route is to make larger payments when you are financially stable, or make an initial small payment towards your outstanding debt to give you more time to gather all the financial resources you need to make a larger lump sum later on. Both methods are done solely online without the aid of a human advisor.
Card issuers also offer similar services for customers who find themselves stuck. Some card issuers offer ‘Balance Protection Insurance. This benefit can provide peace of mind in case of temporary unemployment or being laid off. In this instance, an outstanding credit card debt can be frozen meaning that it won’t accrue fees if you can’t make payments due to job loss.
Debt Settlement
Though we’ve discussed how card issuers can help their clients erase outstanding credit card debt, if the debt has already landed in the debt collector’s hands you’ll find information at https://www.freedomdebtrelief.com to help you decide how to proceed.
Their process is simple: you put aside some money each month into their secure escrow-like savings account. Once you potentially have enough to settle the debt they work with your creditors to work out the best deal for you.
Credit card hardship programs come in many different forms. You do have to be careful though, as some of them can make your situation more costly to resolve. The smart play is to find out all you can about them and choose the approach best suited to your circumstances.