Credit card, store card, catalogue credit and personal loan customers will be able to defer repayments for another three months. Alongside this, bank customers have already been allowed to apply for an interest-free overdraft of up to £500. Anyone wanting to take advantage for the first time can apply by the end of October. More leeway on credit repayments and interest free overdrafts will come as a huge relief to many families juggling bills and those out of work during the crisis.
The help was first ordered by the Financial Conduct Authority (FCA), in April. They have said that if borrowers are in a position where they can resume their repayments they should do so, to avoid getting into more serious difficulty in the future.
The regulator stressed that using the payment deferral should not affect a borrower’s credit rating. However, it warned that loan providers did have other ways to check on whether payment holidays had been taken, such as asking for bank statements, when making decisions on whether to agree to credit applications, so be wary of this for future refernece. Banks might also be stricter in who qualifies for the payment deferral now, and might only agree to a reduction in minimum repayments.
So what is our advice?
Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period. There is always the possibility that you could face an even bigger crunch later on, at a time when jobs and livelihoods may still be in danger. We only recommend that you take advantage of this payment holiday if you really need to. If this is something that you are wary of, please contact us on 02085300720 or email email@example.com We are here to help.
Help for people with car finance, payday loans, rent-to-own deals, pawnbroking, and buy-now-pay-later agreements will be updated by the regulator at a later date.