How to use hardship programs to temporarily suspend credit card payments

Help with credit card debt sometimes comes from an unexpected source—your credit card company. Contacting your credit card company should be your first move if you’re struggling to pay. Many credit card companies have hardship programs to help their customers get out of credit card debt. It’s worth considering what one of these programs might do for you.

Can you pause credit card payments? 

Yes, it's possible to pause credit card payments if you reach 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. The type of forbearance offered depends on the card issuer. For example, the issuer may allow you to reduce or pause payments temporarily. The card issuer may suggest waiving or delaying late fees while ensuring it won't negatively impact your credit score. 

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 pay their bills. This help can take several forms, including:

• Postponing payments

• Reducing monthly minimum payments

• Reducing the interest rate

• Suspending interest charges

These programs 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 typically advertise these programs, because they don’t want to encourage exceptions to their usual payment policies. Also, how much card companies are willing to work with you varies from issuer to issuer.

The bottom line is that it’s always worth asking what your credit card company might be willing to do for you. 

Eligibility criteria and typical terms

Hardship programs are designed to help people who face verifiable financial problems, like high medical bills, recent 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 to offer a hand. 

Hardship program terms vary by the credit card company but may 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 

How long can I suspend payments under a hardship program?

Most hardship programs are short term and last from 3 to 12 months. Again, how long you can suspend payments varies by card issuer and may partially depend on the severity of your situation. 

How to prepare before you contact your credit card company

To qualify, your credit card issuer will want to see what you're up against, so be prepared to provide them with documents that support your case. 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 an illness or job loss. Provide evidence that backs up your situation, like a layoff or termination notice, medical bills, or bank statement showing your financial strain. 

• How long your hardship is likely to affect your ability to pay. It may help you to 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.

• How much you can pay in the meantime. Do some detailed budgeting before you commit to a number. Be prepared to show you’re trying your best to pay what’s owed.

Contact your credit card company as soon as you realize you might have trouble making a payment. They’re more likely to work with customers with a history of keeping their accounts up to date. 

Understand your situation and gather documentation

When you gather all the documentation in advance, you’ll be ready when the card issuer requests it. ‌Here's a sample of the types of documentation that should make your job easier:

• Termination notice

• Layoff notice

• Paystub showing reduced hours along with a paystub 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

Research 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 you to submit.

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:

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 are known to lower your score significantly. 

Account suspension

As a condition for financial flexibility, you might have to agree not to use your card. The issuer might temporarily suspend the account or lower your credit limit. If hardships continue, the credit card company may even close the account.

It may seem like a lucky break if your issuer allows you to continue using your card while participating in a hardship program. However, that's an extra debt you'll have to face at some point.  

Continued interest accrual

Chances are, interest will continue to accrue, even if your account is part of a hardship program. 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 penalty interest rate, which is a higher rate of interest card companies charge on late payments. The high rate is meant to discourage consumers from making late payments. 

Repayment terms after the program: How much do I have to pay back after the hardship program ends?

How much you're responsible for paying back depends entirely upon the agreement you make with your card issuer. For example, depending on your circumstances, your card issuer may lower your interest rate, reducing the total amount you'll repay. It may waive fees or even reduce your balance, either of which will cut down on how much you pay. 

The specific details of your program will determine how much you're responsible to repay. 

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 that tracks your income and expenses to help you manage your finances, spend less, and save more.

• Live below your means. Deliberately build a budget that uses a portion of your income 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 plan 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 bills will be paid 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.

• Meal plan 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 need. 

Communicating with your issuer

If your credit card company agrees to a hardship program, make sure you're both on the same page by getting everything in writing. Then, if you have any questions during the program, call them to clarify. Once you've entered into a hardship program, you and your card issuer form a kind of team. Work with them to ensure you get the most benefit possible from the arrangement. 

Financial counseling or 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 because consumers often need one. 

Your credit card company isn’t the only source of help. If you need help finding your way out of debt, building a budget that works for you, and moving toward long-term planning, financial counseling could help. A trained financial counselor 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 and show you how to 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.

What if you can’t get your credit card company to agree to special terms? Or you may find that it’s tough to pay even with that agreement. In that case, you can consider some alternative forms of debt relief, including: 

• Debt settlement. This is a negotiated agreement to have a creditor reduce the amount you owe, and forgive the rest.

• Bankruptcy. This is a legal process for dealing with debt. The most common types of bankruptcy for individuals are Chapter 7 (wipes away eligible debts) and Chapter 13 (a payment plan). It’s sometimes the most effective way to stop creditors from hounding you if there’s no way for you to pay. 

Can you pause credit card payments? The answer is yes. However, before you do, weigh your options and determine which is most likely to work for you.