You are late or behind on your credit card payments.  The agent calls and tells you about Hardship Plans.  Is this a good deal?

Never forget that the goal of the credit card industry is to make money...lots of money!

They don't care...                    

• about you
• your family
• if you lost your job
• have had major illness

So when they offer a hardship plan, remember the saying,

If it sounds too good to be true, it probably is.

A typical hardship plan will waive or reduce interest rates and fees fo 6 months or so.  The pitch is that this will give you a little breathing room and you can renegotiate your payments or plan later.

• They will want you to set up automatic deductions from your bank account or send them 6 months of post dated checks.  Doesn't sound too secure, does it?

OK, so maybe you agree.  Let's examine the plan.

• Your balance is $5000. 
• You current minimum monthly payment is $150 or so. 
• They offer you payments of $100/month for 6 months at a reduced rate of 6% and no fees.

After six months:

• you've paid $600
• $144 went to interest 
• $456 went to reducing the principle 
• your balance is $45444

Now it is time to renogiate your plan.  More often than not, you'll be back to high interest rates and fees which means it will take you several years and thousands of dollars in interest to pay off your card.

Some plan!