Personal Finance

This strategy could help reduce your credit card payments – yet few people are using it

Key Points
  • Consumers have pulled back on credit card usage since the coronavirus pandemic. Revolving credit outstanding in May is down by 28.6% year over year, according to the Federal Reserve.
  • A combination of the $1,200 stimulus payments, the extra $600 in unemployment payments and reduced spending likely helped consumers keep their heads above water.
  • Credit card providers offer hardship programs. Five percent of the consumers polled by have enrolled since March.
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While lawmakers hash out the next stimulus package, credit card borrowers in the red might consider another tool available to them: negotiating their debt.

"If your income was negatively impacted, it's more likely to cause a blow to your credit score," said Ted Rossman, credit card analyst at "One of the overarching recommendations is to ask for help."

Credit card companies may offer borrowers a lifeline in the form of a hardship program – an assistance plan that may lead to lower monthly payments, a waiver of late fees or lower interest rates for a period of time.

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Yet few people are using this help, according to a recent survey by Only 5% of the consumers polled by the site turned to a hardship program offered by their credit card company.

The personal finance site polled 1,891 credit card holders online from July 1 through July 6.

Borrowers made significant progress on their credit card debt during the pandemic – buoyed by those $1,200 stimulus payments and the additional $600 federal unemployment payment, Rossman said.

Revolving credit outstanding, which includes balances on your credit card, has been declining on an annualized basis since the pandemic took hold.

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These revolving balances fell by nearly 29% year over year in March, according to data from the Federal Reserve. They were down by nearly 65% in April, and down by close to 29% in May.

All that progress could be undone if Congress doesn't roll out an additional round of relief.

"We haven't seen those delinquencies and defaults, and I think it's those stimulus programs that have helped out," said Rossman. "A lot of it has run its course, and that's the big risk going forward."

Negotiating power


Credit card hardship programs allow you to work with your lender to get your debt under control.

There are pros and cons to this.

For instance, your card issuer might let you go into forbearance and pause your payments for a few months. The catch is you'll have to make up those payments and you may still be charged interest on the balance.

You could also ask to temporarily lower your interest rate while you get back on your feet. Just remember that the rate will go back up at the end of the period.

The current average interest rate on credit cards is 16.04%, according to

Ask questions before you agree to a deal with your issuer, including whether there are fees and what will happen if your financial situation is still in peril at the end of the assistance period.

Find out what will happen to your payments once your relief is up: Could this mean a sharp increase in interest? Or a spike in payments to account for the ones you've missed?

As with any other debt relief program, get the details in writing.

"You would think that the companies would be less amenable," said Rossman. "They'd rather get some of your money than none of it."