How to Use Hardship Programs to Temporarily Suspend Credit Card Payments

Everybody needs a breather sometimes. A little flexibility could be a welcome gift when you’re financially maxed out or worse. Under some circumstances, you can get a breather from your credit card debt.

If you’re looking for credit card debt relief, help might come from an unexpected source—the credit card company itself. Some credit card issuers have hardship programs that could give you more time to pay. 

A credit card hardship program could be a good option if you think you can get your payments back on track after a little bit of a break. 

Can You Pause Credit Card Payments?

Yes, it's possible to pause credit card payments through making an agreement with your credit card issuer. Here are two ways to secure a pause:

• Payment holiday. A payment holiday is a temporary arrangement that allows you to stop payments—either partially or in full—for a set period. 

• Forbearance. This could involve adjustments to the terms of your debt. It might include a payment holiday, but it also could temporarily reduce your payments. The card issuer might waive fees or bring your account current, without a negative impact to your credit score. 

The availability of either option and the details involved depend on the credit card issuer. If either option is on the table, you may be asked to provide documentation showing that a major life event, like an illness or job loss, has impacted your finances. 

What Are Credit Card Hardship Programs?

Credit card hardship programs are ways credit card companies help their customers manage their bills during financial difficulty. This help can take several forms, including:

• Postponing payments

• Reducing monthly minimum payments

• Reducing the interest rate

• Suspending interest charges

• Waiving late fees

These programs are typically temporary, and they don’t reduce the amount you owe. They’re designed to make your payments affordable so you can eventually pay off your entire balance.

Credit card companies don’t often advertise these programs. They’d rather that all their customers continue to pay on time. Also, the amount of flexibility you could get varies from issuer to issuer.

It’s always worth asking how your credit card company might be willing to help you get to a place where you can pay what you owe.

Eligibility Criteria and Typical Terms

Hardship programs are designed to help people who face verifiable financial emergencies like medical bills, job loss, or other true hardship. The more specific you are about your situation and the more evidence you can provide, the more comfortable the card issuer is likely to be with offering a hand. 

Hardship program terms vary by credit card company, but could include:

• Lower interest rate to help you pay off the principal debt

• Adjusted payment plan that better fits your current budget

• Waiving some or all fees. 

Again, these programs aren't designed to reduce the total amount that you owe. By temporarily pausing payments or making them more affordable, hardship programs could get you through a tough time until you're able to resume normal payments.

How Long Can I Suspend Payments Under a Hardship Program?

Most hardship programs are short-term, and last from three to 12 months. 

There’s no standard. Hardship programs not only vary from one credit card issuer to another, but they’re also specific to each situation. Before you contact a credit card company about a hardship program, you should figure out roughly how long it’s going to take you to get your finances back on track. 

How to Prepare Before You Contact Your Credit Card Company

To qualify for a hardship program, it helps to explain what conditions you’re facing. These may include:

• The reason for your request. Credit card companies are more likely to work with you if they know your payment difficulties stem from a legitimate hardship. Provide evidence that backs up your situation, like a layoff or termination notice, medical bills, or bank statements showing your financial strain. 

• An estimate of how long your hardship is likely to affect you. It may help if you show that it’s just a temporary problem. For example, if you're out of work, provide the card issuer with a list of interviews you have lined up. Let the issuer know about any temp agencies or job recruiters you're working with.

• A budget for how much you can pay in the meantime. Do some detailed budgeting before you commit to a number. Cut out nonessential expenses. Be prepared to show you’re trying your best to pay what’s owed.

Talk to your creditor as soon as you realize you might have trouble making a payment. They’re more likely to work with customers that have a history of keeping their accounts up to date. Also, if you start missing payments without contacting the company about a hardship program, you are almost certain to incur late fees and negative credit reports. 

Understand Issuer Policies

Some credit card companies don't offer any hardship programs, and policies for those that do vary by issuer. Call your credit card company and speak with someone to learn how they typically handle hardship requests. If they tell you they offer hardship assistance, ask about eligibility requirements and any documentation they'll want.

Explain Your Situation and Provide Documentation

Once you start discussions with a credit card issuer, they may ask you for documentation of the information you’ve given them. Here are some examples of the types of documentation you should be prepared to provide:

• Termination notice

• Layoff notice

• Pay stub showing reduced hours, along with a pay stub showing your income before the reduction in hours

• Medical bills, including bills from your doctor's offices, hospital, labs, insurance deductibles and copays, and any other medical-related expenses

• If you're out of work due to a natural event like a tornado, earthquake, or hurricane, try to provide evidence that your workplace is closed.

Communicating with Your Credit Card Company

A key to making all this work is communicating openly and effectively with your credit card company. Here are some tips:

• Contact them before they contact you. You’re likely to find a credit card issuer more open to discussing a hardship program if you get in touch with them before they reach out to you to chase down a missed payment.

• Be calm. Financial problems are stressful, but you need to show you’re approaching yours rationally. You may find that discussing a solution takes some of the stress out of the situation.

• Understand what’s in it for them. Naturally, the credit card company wants to get paid what it’s owed. If you show them how you can do that if you just have more time or slightly easier terms, it might make sense to them.

• Get any agreement in writing. Once you’ve worked out the terms of a hardship program, have the credit card company confirm it in writing. If they send you a secure message via your online account, download a copy. This helps ensure both parties have the same understanding. It also gives you documentation to refer to if problems arise.

• Stay in touch. If anything unexpected happens or you find a need to change the payment terms, discuss it with the credit card company as soon as possible. If you don’t hold up your end of the agreement, they might void it. 

What You Should Know About Credit Card Hardship Programs

A credit card hardship program can be a real lifeline to help you keep up with your payments. Still, you should be aware of some potential drawbacks, like the following.

Effect on credit: Can pausing credit card payments hurt my credit score?

Pausing payments shouldn’t hurt your credit standing. Although your credit report may include a note stating that your payments are in forbearance, the pause shouldn't factor into your credit score. Forbearance is an excellent way to avoid late payments, which can lower your score significantly. 

However, if as a condition of credit the credit card company lowers your credit limit, this could negatively affect your credit score. A lower credit limit is likely to increase your credit utilization ratio. Still, a lower credit limit should have a less drastic impact than having the account closed, which is a possibility if you can’t work out your payment problems. 

Account suspension

As a condition of a hardship program, you might have to agree not to use your card while in the program. This may actually be a blessing in disguise. Continuing to use the account could deepen your debt problem, and ultimately put the account at risk. The goal should be to get use of the account back once you’ve straightened out your financial problems.

Continued interest accrual

Chances are, interest will continue to accrue, even if your account is part of a hardship program. If your payments are temporarily suspended, this could ultimately cause your balance to grow, and it might take longer to pay down your balance.

As you plan your future budget, remember to factor in the interest that's building on the card. If you're unsure how much that will be, ask a representative of your credit card company to help you figure it out so you can build it into your budget.   

Penalty interest rate

If your hardship program involves a reduced interest rate and payments, be careful to make the scheduled payments on time. Failure to do so could trigger a return to your regular interest rate—or even a penalty interest rate. This is a higher rate of interest card companies charge on late payments. 

Repayment Terms After the Hardship Program: How Much Do I Have to Pay Back After the Hardship Program Ends?

Hardship programs are designed to help you pay back what you owe in the long run. Continued interest accrual may cause you to owe more in the end than you otherwise would have. On the other hand, hardship programs that reduce your interest rate or waive certain fees may result in you owing less. 

In some hardship programs, you’ll be required to get completely caught up on payments when the payment pause is over. For example, let’s say your minimum payment is $250 and you get a three month payment holiday. In month four, you’d be expected to pay $1,000 (the three missed $250 payments, and the current $250 payment). This could work for some struggling borrowers, but not all. Find out your lender’s expectations.  

Once you know the specific details of the hardship program the card company offers, you should be able to figure out how much you’ll eventually have to pay. Knowing this should help you decide whether the hardship program is worthwhile. 

Staying on Track After Using a Hardship Program

A hardship problem can get you out of a jam when you get caught short financially. However, these programs are temporary measures. A hardship program only buys you time. Use that time to catch up on your payments and plan for the future. Figure out a budget that relies on as little debt as possible, and that will ultimately help you keep up with payments without special terms. 

Even though hardship programs are temporary, the chance to get your finances back on track could be a lasting benefit. Here are some ideas for establishing a financially stable future:

• Create a budget. If you don't already have one, build a budget. Tracking your income and expenses could help you manage your finances, spend less, and save more.

• Live below your means. Deliberately build a budget that uses only a portion of your take-home pay rather than every cent. 

• Build an emergency fund. Even if you have to do it a little at a time, save enough money to cover three to six months' worth of living expenses. That way, you don't have to put emergency expenses on a credit card. 

• Pay off debt. High-interest debt like credit cards can take years to pay off and cut into your ability to save for the future. Focus on chipping away at your debt, even if it means adding a few dollars to each payment. 

Budget Adjustments and Resuming Payments

If you're concerned about how you’ll pay your bills once credit card payments resume, here are some ways to trim other areas of your budget to make room: 

• Stay on top of routine car maintenance to reduce the need for repairs.

• Cancel unused (or little-used) subscriptions, like streaming TV channels and music, grooming or meal boxes, or a rarely used gym membership.

• Plan meals carefully, and eat more meals at home. 

• Adopt a cash budget to control credit card spending.

• Before making an impulse purchase, give yourself 24 hours to decide if it's something you really need. 

Pros and Cons of Using a Credit Card Hardship Program

To help you decide whether a credit card hardship program is right for you, here is a summary of the pros and cons:

These are just general conditions of hardship programs. Whether one is the right solution for you depends on the specific terms. Pay close attention to the details of any program a credit card company offers you. 

Financial Counseling and Long-Term Financial Planning

It's easy to believe you're the only one experiencing financial stress, but that's simply not true. The very reason credit card companies have hardship programs is that customers often need one. 

Your credit card company isn’t the only source of help. If you’re still having trouble getting your finances on track after participating in a hardship program, more help is available. 

If you need help finding your way out of debt, building a budget that works for you, or moving toward long-term planning, financial counseling could help. A financial counselor or debt expert could help you figure out how to get rid of debt and avoid falling into debt in the future. They could help you understand your spending patterns in a way that gives you power over them. 

Gaining control of your finances can help you move forward with confidence.

Other Options to Help You Manage Credit Card Debt

A hardship program may help you escape credit card debt, but it isn’t always the right answer.

Consider some alternative forms of debt relief, including: 

• Debt consolidation. A consolidation loan is a new loan that you use to pay off multiple existing debts. It’s an option to consider if you qualify for a lower interest rate compared to what you’re currently paying.  

• Debt settlement. Sometimes, creditors are willing to take less than the full amount you owe and forgive the rest. You can negotiate debts yourself or work with a professional debt settlement company.

• Bankruptcy. The most common types of bankruptcy for individuals are Chapter 7 (wipes away eligible debts) and Chapter 13 (a payment plan). Creditors can’t opt out. All types of bankruptcy temporarily stop collection efforts and give you a legal process for dealing with your debts.