By Stefanie Marty
In difficult economic times many people have trouble meeting their financial obligations and get behind in credit card payments. These missed payments damage credit scores and cause additional charges. To help borrowers maintain their debt and avoid defaulting many financial institutions offer credit card hardship programs.
A credit card hardship program is an agreement between a borrower and a credit card company under which a payment plan is set up. Payments are delayed and interest rates and monthly payments are reduced to a level the borrower can afford. By offering these programs the lender hopes that the borrower will be able to make full payments on the account in the future. Also, credit card hardship programs are not offered to everyone. Typically, they are limited for financial hardship caused by life-changing events.
Credit card hardship programs also have their potential downsides. It is only a myth, and not reality, that with such a program you will be able to reduce your credit card balance in half. Further credit card hardship programs will hurt your credit score and also affect your credit card account.
So make sure you know enough about a credit card hardship program before applying for it. It might be a good solution for some borrowers, but not for others.