Credit card freeze extended for six months ahead of new lockdown
Payment holidays on credit cards, car finance, personal loans and pawned goods have been extended ahead of tougher coronavirus restrictions. The Financial Conduct Authority (FCA) said customers who had not yet deferred a payment could now request one for up to six months.
Those with short-term credit such as payday loans can defer for one month. “It is important that consumer credit customers who can afford to do so continue to make repayments,” it said.
“Borrowers should only take up this support if they need it.”
It comes after the government announced a nationwide lockdown for England beginning on Thursday, which will force all non-essential retailers to close.
The FCA had already brought in payment holidays for credit customers in April, extending them for three months in July. But it has now reviewed the rules – which apply across the UK – amid fears many more people will be financially hit by restrictions. The payment holidays will also apply to those with rent to own and buy-now pay-later deals, it said.
In addition, anyone already benefitting from a payment deferral will be able to apply for a second deferral.
However, the FCA would not comment on whether people could still have interest on the first £500 of their overdrafts waived. It said it would make a fuller statement in due course. “We will work with trade bodies and lenders on how to implement these proposals as quickly as possible, and will make another announcement shortly,” the FCA said of the payment deferrals.
In the meantime, it said customers should not contact lenders who will provide information “soon” on how to apply for the support. It advised anyone still experiencing payment difficulties to speak to their lender to agree “tailored support”. On Saturday, the FCA also announced plans to extend payment holidays for mortgage borrowers.