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I Want to Enter The Financial Hardship Program for My Credit Card Debt

Question:

Dear Steve,

I maxed out my credit cards during covid/the last two years.

I want to enter into the financial hardship program for my highest card, but they close my account at the end of the program. Will this hurt my credit more than it’s currently being damaged from being at my total limit on all my cards?

Kristin

Answer:

Dear Kristin,

There is nothing under the name Financial Hardship Program. Many salespeople and debt relief marketers have used that phrase over the years, but it is just marketing BS. There is no such program and it means nothing.

So let’s tackle the issue of dealing with your debt, which is admirable.

Finding the right solution is not as straightforward as people hope. The best answer depends on several factors and the individual’s goals. Also, so many people incorrectly perceive the different strategies for eliminating debt.

Here is an overview of the significant debt reduction strategies.

debt calculator

I think this recent podcast with Damon Day will help to open your eyes as well.

Listen to the Podcast

You can subscribe to my podcast on any of these sites below.
Amazon Podcast  Apple Podcast  Castbox Podcasts  Google Podcasts  Overcast Podcasts    RadioPublic Podcast  Spotify  Stitcher Podcasts  Tune-In

You also seem to be giving equal weight to competing factors. For example, the idea of reducing debt for financial reasons or maximizing credit scores are very different goals with different strategies.

You should not close the cards you pay off if you want to get the most value out of your past credit activity. In addition, the length of open accounts helps to increase your credit score.

But let’s not kid ourselves. A credit score is not an indication of how well you manage finances. Instead, it is a numerical risk measurement so future lenders can gauge your risk and profit potential.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

People with higher credit scores pay less to borrow money because they are statistically less risky to lend to. But there is not just one credit score. There are many depending on what you are trying to purchase.

Here is another podcast with Damon Day that talks about this in more detail.

You can subscribe to my podcast on any of these sites below.
Amazon Podcast  Apple Podcast  Castbox Podcasts  Google Podcasts  Overcast Podcasts    RadioPublic Podcast  Spotify  Stitcher Podcasts  Tune-In

And then we need to factor in the cost of eliminating debt without saving for retirement. See my online calculator here.

So you see, like a fingerprint, each person’s debt situation is different and a bit unique. You can go it alone and hope for the best solution for your situation. Or you could talk to Damon Day and have a conversation about your particular situation.

You could also give me more details about your debt, savings, age, and financial goals in the comments below, and I could provide a bit more guidance.


Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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