Are you in need of credit card relief right now? If your answer is yes, well, you are not alone. According to reports, Americans were already deep in debt before the COVID-19 pandemic happened. When the health crisis brought the economy into a standstill, it is not surprising that the credit card debt situation got worse.
People panicked when they were told that they needed to stay indoors to avoid getting infected. They bought a lot of things in bulk. And since that cost a lot, most of them used their credit card to pay for it.
Now, the coronavirus pandemic pushed the economy into a recession. And things are getting worse. With people losing their jobs, their ability to pay off their credit card debt goes up in the air. There is also a high chance that they will max out their cards to try and survive.
If you think about it, you can understand why credit card balances will rise in the months to come. At least, if it hasn’t reached its peak yet. The crisis is really pushing people to do it. We just want to survive and feed our families. But that does not exempt us from the responsibility of paying it off. The more you use your credit cards, the more you have to pay back.
But if your finances are compromised because of the recession, how can you afford to pay it off? Where will you find the money to pay your debts?
Your creditors may have the answer for you.
Credit card relief options you can ask from creditors
When we say that your creditors may have the answer for you, that does not mean they will give you the money to pay your debts back. What they can offer is credit card relief.
But what does that mean?
Credit card relief refers to programs that credit card issuers offer to credit cardholders. To be specific, it is for those who are having a hard time getting out of debt – at least, more than the usual. This is a case-to-case basis. And you have several options to choose from.
Waive fees and interest rates
The first option is the waiving of fees and charges. This is for those who do not seek a huge credit card relief. You can request your credit card issuer to lower your payment requirement by waiving some of the fees that are usually added to your monthly dues. Usually, these involve annual fees and maybe penalty charges if you were late on some of your payments. But these can also include interest charges. If you can have them waive your interest, it can lower the finance charges that are making your credit card balance bigger.
Change in due dates
Another credit card relief that you can request from your creditor is to change your due dates. Now there are two ways for this to happen.
One is to simply move the due date so it falls after a paycheck is released or any date that you prefer. The idea is to have the due date fall on a day that is convenient for your budget. That means there is no or very little chance that you will run out of funds to pay it off.
The other option is a bit more extreme. You will ask the credit card company to allow you to skip payments. If you are in a dire financial situation like what we have right now, you might not even have to ask them to do this for you. Reports reveal that credit card companies like Goldman Sachs, American Express, and Capital One are allowing cardholders to skip a couple of months of payments.
You can also get credit card relief by asking for a reduction on your debts. This is the option that will give you the most savings.
Obviously, the most ideal reduction that you can get is to have your balance reduced. You can ask your creditor to allow you to settle your debts. That means you will pay only a portion of your debts and have the rest forgiven. It will take time to negotiate this and you can bet that the creditor will not agree. But if they believe that you are in a real financial crisis, they might just relent. It’s better than getting nothing in case you file for bankruptcy.
But this payment reduction is not the only way you can get credit card relief. You can ask your creditor to lower your monthly payments too. This is not a reduction in your balance. You still owe the same amount of money. But the debt will be stretched over a longer period so you can be allowed to pay a smaller amount each month. This will make it easier on your budget.
The last option that you have to reduce your payments is by asking the creditor to lower your interest rates. If they reduce your rates, the finance charges that will be added to your budget each month will be reduced. This will make it easier to cope with your credit card payments.
How to get started on credit card relief
Since you already know your options to get credit card relief, it’s now time to get started. You need to find the best solution for your financial situation and you need to act now.
Here are tips on how to get started on solving your credit card issues.
Prepare to negotiate
It’s always a good idea to come prepared. If you will seek out credit card relief, you need to prepare for it. You need to know the options that you can choose from to make your credit card payments easier. This will vary depending on the creditor. So make sure you do your research properly.
It is also important for you to understand your rights. What can the creditor threaten you with? What are the laws that protect you? If you have a clear understanding of your rights, you will know how far you can push when you are trying to negotiate with your creditors.
And make sure that before you get in touch with the credit card company, you have to prepare all the documents and information that they may ask from you. That way, you have everything that you need to negotiate for the best credit card relief with them.
Call your creditor
Once you are ready with all the information, you can now call your creditor. Call their customer support and make sure you get the details of the person you are talking to. Ask their name and position in the company. This will give you an idea of the authority that they have in negotiating your terms.
You should also ask for the reference number of the call. It helps to have a reference number so the next person you talk to will have the notes from the last conversation you had with the credit card company. This will help you pick up where you left off. Because even if you want to get the negotiation process over with, there is a very high chance that you will be making more than one call. This is especially true if you are asking for a huge reduction in your credit card balance.
Be polite but firm
When you talk to your creditors, make sure you keep your tone polite. You are the one asking for credit card relief. That means you are asking a favor from them. You cannot be demanding or condescending about it. Being polite will increase your chances of getting a favorable agreement. Even if they say no to you, don’t take offense. It’s still a business for them. Just be patient and politely tell them that you respect their decision and that you will try again to negotiate with them another time. Then you should plan another conversation with them. If you are persistent enough, they may relent and give in to your request.
While you are expected to be polite, you should also be firm. The credit card company will insist on their payment terms. But you have to stick to your goal. Do not agree to an amount that you know you cannot afford. That will just backfire on you. If they won’t agree to your proposal, end the call and try again another day.
Document every agreement
Finally, when you are trying to negotiate a credit card relief, you need to document everything. Write the date and time of the call and include the details of the person you talked to. Then summarize the important parts of the conversation – specifically those that you agreed upon. This will help you track the progress of your negotiations. Not only that, if you are negotiating with more than one creditor, this will also help you monitor all the communication.
But at the same time, documenting the agreement will also protect you. Once you have an agreement, document it and send it to the credit card company and have them confirm that it was what you agreed upon. You have to get a written approval or agreement from them before you send any payment. That way, you are both clear on the details of the credit card relief.