What Is Credit Card Forbearance?

Credit card forbearance is a short-term agreement with your card issuer that pauses or lowers your monthly payments while you work through a financial hardship.

Falling behind on a credit card is stressful. If your income drops or a big bill lands in your lap, forbearance can give you room to breathe. It is a short pause on your payments that keeps your account in good standing while you get back on your feet.

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However, forbearance doesn't eliminate your debt, and you'll still need to repay what you owe. Before you apply for forbearance, it's important to understand how it works and what it can and can't do.

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Key Takeaways

• Credit card forbearance is a short-term agreement that pauses or lowers your payments during a hardship: It keeps your account in good standing while you recover.

• It is not debt forgiveness: Your balance doesn't disappear, and you still owe the full amount once the relief period ends.

• Interest usually keeps accruing: The CFPB notes your balance can grow even while payments are paused or reduced.

• Most plans run three to 12 months: The exact length depends on your issuer, your hardship and your payment history.

• Call before you miss a payment: The CFPB advises reaching out as soon as you know you can't make your payment, since waiting limits your options.

• Weigh the alternatives: A balance transfer card, debt management plan or consolidation loan may fit better if your hardship is long-term.

Summary generated by AI, verified by MoneyLion editors

Credit Card Forbearance at a Glance

Credit card forbearance is a temporary payment relief program offered by some credit card issuers to customers facing financial difficulties. Depending on the issuer and your situation, the arrangement may allow you to skip payments, make reduced payments, receive a lower annual percentage rate (APR) or avoid certain credit card fees for a set period.

The key thing to remember is that forbearance is not debt forgiveness. The balance on your credit card doesn't disappear, and you'll generally still be responsible for repaying the full amount you owe once the relief period ends. Because terms vary widely by issuer, it's important to understand the details before enrolling.

How Credit Card Forbearance Works

Here is how the process works from start to finish.

1. Call your issuer: Use the number on the back of your card and ask for the hardship or financial assistance team.

2. Explain your hardship: Share the reason you cannot pay, such as job loss, medical bills or a natural disaster.

3. Share your budget: Tell them what you can afford to pay each month so they can match you with a plan.

4. Review the offer: Your issuer will lay out the plan's length, the new payment amount, and how interest will be handled.

5. Get the terms in writing: Ask for an email or letter that spells out the start date, end date and any fees.

6. Make your new payments on time: Missing a forbearance payment can cancel the plan and restart late fees.

Most credit card forbearance plans run for three to 12 months, according to the Consumer Financial Protection Bureau (CFPB). The CFPB also notes that all major U.S. card issuers offer some form of hardship or forbearance program, though the terms differ by bank. Interest usually keeps building during the pause, so your balance can grow even when you are not making full payments.

How Forbearance Compares to Other Debt Relief Options

What Relief a Forbearance Program May Offer

Not all credit card issuers offer the same type of relief, but common forms of assistance include:

• Paused monthly payments for a limited period

• Reduced minimum monthly payments

• Lower interest rates or temporary interest relief

• Waived late fees or other account fees

• Temporary suspension of collection activity

Because programs differ by issuer, borrowers should carefully review the terms before agreeing to any hardship plan.

How Major Issuers Structure Hardship Programs

Each credit card hardship program works a little differently. Here is a quick look at what to expect from a few major issuers.

• American Express®: Offers short-term plans of up to 12 months with a lower APR and a reduced minimum payment.

• Citi®: Runs a hardship program that can lower your APR, waive late fees and set a fixed monthly payment for a set period.

• Discover®: Provides a payment plan of up to 12 months with a reduced interest rate and paused late fees for eligible cardholders.

• Chase: Offers case-by-case payment assistance that can include lower payments, waived fees and a reduced APR.

• Bank of America: Reviews hardship requests one at a time and can lower your payment, reduce your APR or set up a longer repayment plan.

Who May Qualify for Credit Card Forbearance

The Consumer Financial Protection Bureau (CFPB) advises you to call your issuer as soon as you know you cannot pay. Waiting until after you miss a payment limits your options and can lead to late fees, a lower credit score and a higher APR.

Borrowers experiencing legitimate short-term financial hardship may qualify for credit card hardship assistance. Common situations include:

• Job loss or unemployment

• Reduced work hours or income

• Serious illness or injury

• Divorce or separation

• Death of a family member

• Major unexpected expenses

Issuers may also consider your payment history when reviewing an application. Customers who have consistently made payments before their hardship occurred may have a better chance of receiving assistance. However, approval is never guaranteed, even when the hardship is genuine.

Pros and Cons of Credit Card Forbearance

Like most financial relief programs, credit card forbearance has advantages and drawbacks. Here are the pros and cons of credit card forbearance.

Pros

• Provides breathing room during a temporary financial setback

• May help prevent missed payments and late fees

• Can help avoid penalty APRs and collection activity

• Frees up cash flow for essential expenses such as housing, food and medical care

• Gives borrowers time to stabilize their finances

Cons

• Interest may continue to accrue during the relief period

• The balance may grow even while payments are paused

• The debt is not forgiven and must still be repaid

• Payments may become difficult again when the program ends

• Higher balances can increase credit utilization and potentially affect credit scores

Forbearance is often most effective when the hardship is temporary and recovery is expected within a relatively short timeframe.

How Credit Card Forbearance May Affect Your Credit

Credit card forbearance itself is generally not treated the same way as a missed payment, provided you follow the terms of the agreement. In many cases, participating in a credit card hardship program can help you avoid delinquency and more serious damage to your credit profile.

However, there can still be indirect effects. If interest continues to accrue while payments are reduced or paused, your balance may increase. Higher balances can raise your credit utilization ratio, which may negatively impact your credit score.

It's also a good idea to monitor your credit reports and account statements throughout the process to ensure information is being reported accurately.

When Forbearance May Make Sense

Credit card forbearance is typically best suited for borrowers dealing with a temporary financial hardship rather than a long-term debt problem.

It may make sense if:

• You expect your income to recover within several months

• Your financial difficulties are temporary rather than ongoing

• You need short-term payment relief to avoid falling behind

• You have a realistic plan to resume payments once the program ends

If your debt is already unmanageable and your financial outlook isn't expected to improve soon, a different solution may be more appropriate.

Alternatives to Credit Card Forbearance

Forbearance isn't the only option available if you're struggling to get out of credit card debt.

Potential alternatives include:

• Balance transfer credit cards: Qualified borrowers may be able to move balances to a card offering a temporary 0% introductory APR.

• Debt management plans: Credit counseling agencies can help create structured repayment plans with participating creditors.

• Debt consolidation loans: Consolidating multiple balances into a single loan may simplify repayment and potentially lower interest costs.

• Debt settlement: In some cases, borrowers may negotiate with creditors to settle debts for less than the full balance owed.

• Bankruptcy: While a serious step with long-term consequences, bankruptcy may provide relief for borrowers facing overwhelming debt.

Bottom Line

Credit card forbearance can provide valuable breathing room when income is interrupted or expenses unexpectedly rise. However, it doesn't erase debt, and interest may continue to accumulate while payments are reduced or paused.

If your financial setback is temporary, forbearance may help you avoid falling behind. If your debt problems are more severe or long-lasting, it may be worth exploring more comprehensive debt-relief options.

Credit Card Forbearance FAQs

Does credit card forbearance hurt your credit score?

Forbearance itself does not lower your credit score if your issuer reports the account as current. Your score can drop if the issuer marks the account as being in a hardship plan or if you were already behind on payments before the plan started.

How is forbearance different from deferment?

Forbearance pauses or lowers your payment, but interest usually continues to accrue on your balance. Deferment delays your payment to a later date and sometimes pauses interest accrual, which is why it is more common with student loans than with credit cards.

How long does credit card forbearance last?

Most plans last three to 12 months, according to CFPB guidance. Your issuer sets the exact length based on your hardship and your payment history.

Will interest keep adding up during forbearance?

Yes, in most cases. The CFPB reports that credit card issuers usually keep charging interest during a forbearance plan, which can raise your total balance.

Can you still use your credit card during forbearance?

Most issuers freeze new purchases while you are in a forbearance plan. You will need to use a different card or cash for daily spending until the plan ends.

What happens if you miss a payment during forbearance?

Missing a payment can cancel the plan right away. The issuer can restart late fees, report the missed payment to the credit bureaus and ask for the full past-due amount.

Key Terms

• Credit card forbearance: A temporary agreement that pauses or lowers your card payments during financial hardship.

• Hardship program: An issuer program that can lower your APR, reduce payments or waive fees for a set period.

• Deferment: A delay of payments to a later date, which sometimes pauses interest — unlike forbearance.

• Annual percentage rate (APR): The yearly cost of borrowing including interest and fees.

• Credit utilization: The share of your available credit in use; a growing balance can raise it and hurt your score.

• Delinquency: The status of an account once a payment is missed, which forbearance can help you avoid.

• Debt forgiveness: Cancellation of part of what you owe — not the same as forbearance.

• Debt management plan (DMP): A nonprofit-run repayment plan that negotiates lower rates with your issuers.

Sources

• CFPB: What should I do if I can't pay my credit card bills? 

• CFPB: Dealing with debt 

• CFPB: What is a debt management plan?

Summary generated by AI, verified by MoneyLion editors

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