The holiday bills are arriving, and millions of Americans are facing a harsh reality. They can't pay them all.
But before you spiral into panic or let those credit card statements pile up unopened, you have options that your credit card company probably hasn't told you about.
The Holiday Hangover Hits Hard This Year
Adobe Analytics projects that over $20 billion in online holiday purchases were made using Buy Now, Pay Later services this year. More than one in four shoppers said they planned to take on debt using credit cards or buy now, pay later loans to fund their holiday shopping. Now those bills are coming due, and many people are struggling.
The numbers paint a troubling picture. A survey found that 31 percent of 2024 holiday shoppers who used credit cards still haven't paid off their balances. Meanwhile, interest rates remain punishingly high. Average credit card interest rates sit at 21.39 percent. Retail store cards average 30.58 percent APR.
One Los Angeles copywriter told CNBC she racked up roughly $1,700 in buy now, pay later debt over the holidays. She's been selling clothes and shoes to make payments. She's far from alone in this predicament.
The Programs Banks Don't Advertise
What many people don't know about is that major credit card issuers offer hardship programs designed specifically for situations like this. These programs aren't advertised on websites or mentioned in card agreements. But they exist, and they can be a genuine lifeline.
A credit card hardship program is a payment plan you negotiate with your card's issuing bank. It may include waived fees and lower interest rates over a specific time frame, often ranging from three months or longer. The terms vary by issuer. Relief can include temporarily reduced minimum payments, lower interest rates, or even complete suspension of interest charges for a set period.
American Express offers both short-term plans lasting up to 12 months and long-term plans that can extend up to 48 months. Possible benefits include lower minimum payments, reduced APR, and waived fees. Other major issuers like Bank of America, Discover, Chase, Capital One, and Wells Fargo offer similar programs. The specifics vary.
Real Relief: What These Programs Actually Do
The assistance isn't theoretical. One entrepreneur who enrolled in a hardship program with American Express for a card charging 24% APR said the company offered six months at 0% APR. It then increased incrementally to 3%, then 9%, and eventually back to 18%. That breathing room allowed him to tackle $80,000 in credit card debt from a failed business.
Common benefits include:
- Reduced interest rates - Some programs drop rates to as low as 0% temporarily
- Lower minimum payments - Your required monthly payment can be significantly reduced
- Waived late fees - Past due charges may be forgiven
- Extended payment plans - Spread your balance over a longer period
- Payment deferrals - Some programs allow you to pause payments entirely for a short period
The key is acting before you miss payments. Under the CARES Act, any account that has a payment accommodation applied to it must be reported to credit bureaus as current if it was current when the accommodation was made.
How to Get Help: The Conversation You Need to Have
Most people wait too long to reach out. Bank of America emphasizes that the earlier you contact them, the sooner you can work together to come up with a solution. Don't wait until you've already missed multiple payments.
Step 1: Call the number on the back of your card
Don't use the general customer service line. Look for the specific hardship or financial assistance number if one is listed. If not, the regular number works. Just be clear about why you're calling.
Step 2: Be honest about your situation
You don't need to share every detail of your life. But be upfront about what happened. Lost your job? Medical emergency? Business failed? Holiday overspending? Banks have heard it all. They want to help because helping you pay is better than you defaulting.
Step 3: Know what you can afford
Before you call, look at your budget. What can you realistically pay each month? The bank will ask. Having a number ready shows you're serious about resolving this.
Step 4: Ask specific questions
Can they reduce your interest rate? For how long? Will they waive late fees? Can they lower your minimum payment? Will this affect your credit score? Get clear answers before you agree to anything.
Step 5: Get it in writing
Once you agree to terms, ask for written confirmation. You want documentation of what was promised. Keep copies of everything.
Beyond Hardship Programs: Other Options Worth Knowing
If hardship programs aren't enough or you don't qualify, you have other paths.
Balance transfer cards can give you breathing room if you still have decent credit. Many offer 0% APR for 12 to 21 months. Just watch out for balance transfer fees, typically 3% to 5% of the amount transferred. And make sure you can pay off the balance before the promotional period ends.
Credit counseling agencies can negotiate with your creditors on your behalf. The National Foundation for Credit Counseling offers free or low-cost services. They can set up a debt management plan that consolidates your payments and may reduce interest rates. Be wary of for-profit debt settlement companies that promise to eliminate your debt. Many charge high fees and can damage your credit.
Personal loans from banks or credit unions might offer lower interest rates than your credit cards. If you can qualify for a rate below what you're currently paying, consolidating your debt into one loan can save money and simplify payments.
Buy Now, Pay Later amnesty is emerging at some providers. Affirm, Klarna, and Afterpay have been offering payment flexibility to struggling customers. Contact them directly to discuss options. Some may allow you to extend payment terms or pause payments temporarily.
What Not to Do When You're Drowning in Debt
Don't ignore the problem. Missed payments tank your credit score fast. Late fees and penalty interest rates make the hole deeper. Collection calls and lawsuits follow.
Don't take out payday loans or cash advances. These options come with astronomical interest rates, often exceeding 400% APR for payday loans. You'll make your situation dramatically worse.
Don't raid your retirement accounts. The taxes and early withdrawal penalties will cost you more than you realize. Plus, you're sacrificing your future financial security.
Don't fall for debt relief scams. If someone promises to eliminate your debt for pennies on the dollar or asks for upfront fees before providing services, walk away. Legitimate nonprofit credit counselors don't operate that way.
The Bigger Picture: Breaking the Cycle
Getting through this immediate crisis is crucial. But breaking the cycle matters more.
Financial experts recommend building an emergency fund of at least $1,000 as quickly as possible after you stabilize your debt situation. That buffer can prevent future emergencies from becoming debt crises. Then work toward three to six months of expenses saved.
Consider your relationship with Buy Now, Pay Later services. These platforms made holiday shopping feel painless. But that pain arrived all at once in January. If you struggled to manage multiple BNPL payments, it might be time to delete those apps and stick to paying with money you actually have.
Credit cards aren't evil. But they require discipline. If you can't pay off your balance in full each month, you can't afford what you're buying. It's that simple.
Take Action Today
Your credit card company would rather work with you than send your account to collections. Hardship programs exist because banks did the math. They lose less money by helping you stay current than by writing off your debt as a loss.
The bills won't go away on their own. Neither will the interest charges or the late fees. But relief programs are real, and they're available right now.
Call your credit card company today. Ask about hardship programs. Be honest about your situation. Work out a plan you can actually afford.
The holiday debt feels overwhelming. It doesn't have to be permanent. Take the first step.
Resources:
- National Foundation for Credit Counseling: 800-388-2227 or nfcc. org
- Financial Counseling Association of America: www.fcaa.org
- Consumer Financial Protection Bureau: www.consumerfinance.gov
If you're struggling with debt and need help, these organizations offer free or low-cost guidance. Don't wait until the situation becomes unmanageable. Reach out today.