Could a credit card company close your account if you enter a hardship program?

A credit card hardship program can provide breathing room when bills become difficult to manage, but it may also restrict how the account works or lead to its closure.

Credit card debt can become unmanageable after a higher grocery bill, an unexpected car repair or another increase in regular expenses. Carrying a balance from one month to the next can make the pressure worse, especially with the average credit card rate at 22.15%, according to Federal Reserve data cited in the article.

Many issuers offer hardship programs to customers affected by job loss, reduced income or another financial problem. Depending on the lender and the borrower’s circumstances, the program may temporarily lower the interest rate, reduce the monthly payment, waive certain fees or modify the repayment terms.

Account closure is possible, but it does not happen automatically in every case. Some plans leave the account open while suspending new purchases, and the issuer may also reduce the credit limit. Other arrangements close the account and place the remaining balance on a modified repayment schedule.

The article says borrowers should understand what will happen to the account before enrolling. From the issuer’s perspective, restricting new borrowing can make repayment easier when a customer no longer can afford the original terms.