Credit Card Hardship Assistance Explained

The current economic slowdown is forcing more and more Americans to the brink of financial ruin. The prevalence of credit is also making things worse for millions of consumers already in debt. With continuous and uncontrolled use of credit, cardholders can find themselves in deeper troubles, experts say. The unstable job market and poor economic figures are also resulting in more Americans getting laid off and unable to settle their mounting credit card debts.

Most financial counselors would often recommend enrolling in “hardship assistance” usually sponsored by major banks and card companies. These programs allow consumers with severe financial problems the opportunity to take control of their finances and manage their credit better. However, many advisers often fail to explain the complexities and details surrounding hardship programs.

Credit specialists say that financial advisers should do more than tell their clients to contact their card companies. Rather, counselors should provide concrete plans of action to help their clients recover from potentially devastating financial disasters. A complete plan should also include specific budgetary guidelines to help consumers rein in lavish and unnecessary spending.

Experts say that the cardholders themselves have to take the initiative to start saving more money and rescue their credit reputation. According to industry specialists, consumers should first stop using credit. Continuous reliance on plastic can often prove to be harmful for cardholders’ credit standings especially if they are not consistent in settling debts or paying balances. Using credit cards even if consumers are unable to make regular payments can affect credit scores greatly.

Cardholders should avoid spreading money around to pay for balances on different cards. Instead, consumers should pay off balances on cards with the highest interest rates. They can then use extra money to pay for their dues on other cards. This would give debt-ridden Americans a better chance to settle their balances and improve their credit scores.

Consumers should also stick to a budget that their income can support. Lifestyle changes may sometimes be necessary for cardholders to see significant changes in their credit ratings. Unnecessary expenses using credit should be minimized and any extra money after essential expenses should be used to pay for debts.

Allotting a particular amount each month to pay for outstanding balances is also a good idea. Cardholders can use this amount to negotiate with card companies. Card issuers would often prefer to get any payment rather than forego on the consumers’ debts. Americans with large debts can then ask their card issuers for hardship assistance and request financial help. Of course, cardholders must have a compelling reason to apply for assistance.