Here is what you need to know about credit card relief during a financial crisis and some of your options. (iStock)
Few people are immune to financial crises, but if you have credit card debt, you may experience more financial difficulties than others. Fortunately, many credit card companies offer various forms of relief to people experiencing sudden financial difficulties.
While a credit card issuer may provide automatic relief to cardholders, you generally need to request assistance to qualify. Here is what you need to know about credit card relief during a financial crisis and some of your options.
How to pay off credit card debt during a financial crisis
If you don’t have extra money to pay off your credit card debt right now, here are some alternatives to consider:
Apply for a balance transfer credit card: Balance transfer cards offer introductory zero percent APR promotions that can give you time to pay off your debt without interest. Even if you can’t afford it within the promotional period, it can give you valuable time to get back on the right track with no interest working against you. You can use Credible’s free online tool to compare cards and find one that meets your needs.
Apply for a personal loan: On average, personal loans charge lower interest rates than credit cards, so you could save money by consolidating your debt with one. However, your terms will vary based on your credit score and other factors, and your monthly payment will likely be higher than your current minimum payment. If you are considering a personal loan, visit Credible to pre-qualify and compare personal loan rates.
Use credit card rewards: If you earn cash with your credit card, consider using that to pay off debts instead of other things.
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Work with a credit counselor: A credit counseling agency can help you with your debt through a debt management plan. For a modest monthly fee, credit counselors can help you lower your monthly payments and even negotiate lower interest rates.
Take the time to compare your options based on your situation. In some cases, it may be worth talking to a credit counselor (they usually offer free consultations) to get professional advice for your short and long-term needs. Use Credible’s free online tool to compare the cards currently available and find the one that meets your criteria.
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How to Get Credit Card Debt Relief During a Financial Crisis
If you’re having trouble during a financial crisis, here are some types of credit card relief you can ask for:
New expiration date: Many banks and credit unions allow cardholders to move their account due date, primarily to better align their payment with when they are being paid. If you’re having trouble with money, requesting a new due date might also give you a little more time to collect the money and make your payment.
The elimination of charges: If you fall behind on your monthly payment for any reason, you may be eligible to have your late fee waived if it is your first time. In fact, some credit cards automatically waive their first surcharge or do not charge surcharges. Also, some cards do not charge a penalty APR, a higher interest rate that may apply if you pay late. Finally, some card issuers may be willing to waive annual fees as a courtesy.
Increase of the credit line: If you are approaching your credit card maximum with the necessary expenses, you can call your credit card company and request a larger line of credit. This process generally involves a tough credit check, which can affect your credit score. But the benefit of a higher credit limit may pay off in the long run.
Deferred payments: Credit card companies understand that it is better to pause your payments than to allow you to fall behind: you are more likely to pay your bills if you have time to recover financially. As a result, you can request deferred payments on your account. Just be aware that interest is likely to continue to accrue on your debt during the deferment period.
Lower interest rate: In some cases, you may get a lower interest rate on your account than what you are currently paying. Even if the reduction is temporary, it can save you money while trying to meet your financial obligations.
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It is important to remember that no two lenders are the same, so your options during financial difficulties may vary depending on your credit card company. Call your card issuer to understand your options.
