Credit card and loan payment holidays given to 1.7m Brits in coronavirus outbreak – here’s what to do next

MILLIONS of Brits facing money fears due to the coronavirus outbreak have been given payment holidays on credit cards and loans by their lenders.

Trade body UK Finance has revealed that 1.05million people have been given payment holidays on their credit cards over the past three months.

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While a total of 707,000 people have been given a break on paying back their personal loans for the same amount of time.

Lenders have worked with the Financial Conduct Authority (FCA) to also offer 27 million customers the option of interest-free borrowing on the first £500 of their overdrafts.

People who have severe financial difficulties should discuss the best options with their lender or reach out to a debt charity for help.

Brits who have been granted payment deferrals will be contacted by their credit card providers before the end of the three-month period to plan their next steps.

Depending their financials situation, they may be offered further support in the form of full or partial payment deferrals or other arrangements that help support them through this difficult period.

People who haven’t asked for a payment deferral or an arranged interest-free overdraft of up to £500 will have until October 31 to apply for one

We’ve explained how to apply for a payment holiday below.

Eric Leenders, managing director of personal finance at UK Finance, said: “Many borrowers facing financial pressures are taking up the measures being offered by lenders to help them get through this crisis.

“The banking and finance industry has a clear plan to help the country through these tough times and is committed to providing ongoing support to those customers who need it.

“Each customer will face a unique set of circumstances. But no matter what your situation, if you are facing temporary financial difficulties due to the coronavirus pandemic there will be support still available to help you through these challenging times.”

How do I apply for a credit card or loan payment holiday?

You can apply online, head into your local branch or ring your bank.

Applying for a repayment holiday or an overdraft increase typically require you to complete an online form or login to your online banking.

We’ve compiled a list of the different pages of advice that have been created by some of the major banks to help guide you with what is being offered.

Will a payment holiday affect my credit score?

Where a repayment holiday is agreed as a result of coronavirus, the UK’s three credit reference agencies – Equifax, Experian and TransUnion – say it won’t impact your credit score as they’ll implement an “emergency payment freeze”.

This means it won’t be recorded on your file.

It also applies to reduced payments and paused payments, but not to increased credit limits or new borrowing.

What happens if I’m coming to the end of my three month payment holiday and I’m still struggling?

Firms have been told to contact customers to find out if they can make repayments after their payment holiday and to agree a repayment plan if possible.

If they’re still struggling and can’t meet a repayment plan, more help should be offered.

The Financial Conduct Authority expects lenders to do the following if  borrowers still can’t meet repayments:

• Offer reduced credit card or personal loan repayments or a complete deferral of repayments for an additional three months
• For customers who’ve yet to apply for a payment freeze, the deadline will be extended until 31 October, 2020
• Offer lower interest rates on borrowing above interest-free buffers on overdrafts
• Customers who already have an arranged interest-free overdraft can request up to £500 interest-free for a further three months
• For customers who’ve yet to apply for an up to £500 interest-free overdraft, the deadline for this will be extended until 31 October, 2020

The new guidance applies to credit cards, store cards and catalogue credit, personal loans, and overdrafts.

It doesn’t, however, apply to consumer credit products, such as car finance, high-cost short-term credit, rent-to-own, pawnbroking and buy-now pay-later.