The banking and finance industry has provided financial relief to hundreds of thousands of consumer credit customers whose finances have been impacted by the coronavirus, UK Finance reveals today.
Lenders have worked with the Financial Conduct Authority (FCA) to help people facing temporary financial pressures due to the Covid-19 outbreak by providing a payment freeze on credit cards and personal loans of up to three months, and offering customers the option of interest-free borrowing on the first £500 of their overdrafts.
As of 30 April,almost 700,000 customer accounts have been given a payment holiday on their credit card. UK Finance members have also provided almost 470,000 payment holidays on personal loans for customers impacted by the coronavirus.1 Firms have also worked to ensure these steps will not adversely affect customers’ credit files, as taking a payment holiday will not be reported to credit reference agencies as the customer being in arrears.
In addition,over 27 million customer accounts have been offered three months of interest-free borrowing on the first £500 of their arranged overdrafts if needed. Any overdraft interest waived by lenders during this period will not have to be repaid at a later date.
These steps to support borrowers facing financial pressures are part of a broad package of measures to help customers get through these tough times, including mortgage payment holidays, increasing the contactless limit to £45 and raising awareness of scams through the Take Five to Stop Fraud campaign.
All providers are ready and able to offer additional support to borrowers who are impacted directly or indirectly by Covid-19.
Commenting, Stephen Jones, UK Finance CEO, said:
“Many people across the country are facing financial pressures due to the coronavirus, and lenders are taking decisive action to help them through these tough times.
“Payment holidays on loans and credit cards and interest-free overdrafts can provide much-needed support to those with short-term cash flow pressures, whether it’s to cover next week’s grocery shop or next month’s utility bill.
“A payment holiday may not be the right choice for everyone, and lenders have a range of options to help customers through the Covid-19 crisis.
“We would encourage any customers concerned about their financial situation to check with their lender, starting by looking at their website which will have the latest information on the support available.”
Customers who are facing short-term difficulties in making repayments due to Covid-19 are advised to check with their lender to see whether a payment holiday is the best option for them. To help their customers, firms are constantly keeping their websites updated with the latest information, including FAQs, which can answer many customer queries. For more detailed questions there are a range of different ways to get in touch, including through online chat, social media and mobile and banking apps.
Interest will normally continue to be charged during payment holidays and so customers should consider their options carefully and only apply if they are facing temporary financial difficulties and need immediate help. Customers in more severe financial difficulty should speak to their lender about the most appropriate action to take, which could include speaking to an independent debt charity to talk through the options and agree a way forward.
Customers should not cancel their direct debits or standing orders on unsecured credit products before a payment holiday has been agreed, as this will be counted as a missed payment and could negatively impact their credit file.