Definition
Call to action is a discretionary benefits package made available by certain creditors that participate in a debt management program.
Analysis
Major credit card issuers agreed in 2009 to provide additional flexibility for distressed cardholders that seek to repay their debts through a debt management program. These benefits may be granted for cardholders experiencing more serious financial distress.
Delinquency and default rates began hitting historic highs in 2009 due to the severe recession that had affected so many households. Call to action was made possible because credit card issuers realized that many of their cardholders would likely default without additional assistance.
Additional benefits have followed this basic pattern:
- Further interest rate reductions than previously were allowed.
- Lower monthly payment allocations
- Relaxed fees
This discretionary tool is voluntarily provided by most major credit card issuers and is only available to cardholders that enroll all of their credit card accounts into a debt management program. Eligible cardholders would generally include those that are at or near a monthly break-even on their budget. Any household with substantial discretionary income or a large budget deficit would not qualify for most benefits.
