Credit Card Issuers Are More Willing to Help Struggling Cardholders

It used to be that people that struggled to pay their bills turned to credit counseling services to negotiate repayment plans. It is now gotten to the point however, that many consumers can’t afford repayment plans even though many credit card companies are now offering deeper concessions in an attempt to help.

The National Foundation for Credit Counseling approached the major credit card issuers in hopes of making a deal that would assist consumers that could not pay their credit card debt under the current terms available.

The group recently announced that they have come to an agreement to help beleaguered credit card holders with some of the top credit card companies in the business including American Express, Chase, Discover, Capital One, and Bank of America.

It really is no surprise that the credit card companies are willing to make a deal. After all, it is in their best interest to receive some form of payment as opposed to having their customers default on their debt in which case the credit card issuers would receive nothing.

The whole point of these new more lenient payment plans is to avoid bankruptcy. As more and more Americans face difficult financial times, many now no longer qualify for debt repayment plans that have been traditionally offered through debt management programs.

The way traditional debt management plans work is that credit card issuers will waive certain charges and fees in addition to agreeing to lowering the interest rates that are charged. The credit card accounts are closed as the cardholders go on a monthly payment plan with the goal of having the entire balance paid off within five years.

The amount of leeway that is granted to the cardholder is determined by the credit card company. There is no standard set across the board so some consumers will receive more favorable terms than others. This is not an exact science and nothing is set in stone.

Basically by reducing or completely eliminating the fees, and by lowering interest rates, the consumer is now on a path where they pay back approximately 2% of the entire debt each month. It is certainly no magic bullet, but it is a sound financial plan to pay off credit card debt.

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