PAYMENT holidays for struggling credit card and personal loans customers are being extended by up to six months.
The Financial Conduct Authority (FCA) has today confirmed the support, which was first outlined earlier this month.
The payment holidays can also be taken on rent-to-own agreements, buy-now-pay-later schemes and pawnbroking.
The extension will be available for any household that hasn't already had a payment break of more than six months.
If you're on a payment holiday at the moment, and it's due to last for fewer than six months, you'll be allowed to extend it.
But households that have already paused their repayments for six months won't be entitled to another break.
Instead, lenders are being asked to provide tailored support – although this could be reported on your credit file.
What is a payment holiday and should you apply for one?
PAYMENT holidays are when a lender agrees to pause your monthly repayments for a set amount of time.
This has to be agreed in advance, so don't stop making your repayments until your bank has given you permission to do so.
Typically, payment holidays are offered in extreme circumstances and are designed as an emergency measure to help you through a difficult financial time.
If you think you need to take one, you should speak to your lender to discuss your options – but do note that the break in payments doesn’t remove any debt or financial obligations.
Most lenders will also still charge interest during this time, so be aware that your repayments will go up in the long-run.
You should always continue to make your normal payments if you’re financially able to.
ue Anderson, head of media at debt charity StepChange, said: “If you can continue to make your normal payments without difficulty, then you should.
“Any temporary measures being offered by lenders don’t remove financial obligations – they are designed as an emergency measure to help you get through a period where your income may have taken a serious knock.
“However, if you need to use them then you shouldn’t hesitate to talk to your lenders.
“While taking a payment break would usually be noted on your credit file, the credit reference agencies have confirmed that, during the current crisis, this should not have a future influence on your credit status.”
The FCA said the guidance will come into effect on November 25, but it's encouraging firms to provide the payment breaks earlier if they're able to.
The extension comes after the regulator told lenders in March to pause payments for three months for customers whose finances had been negatively affected by the coronavirus crisis.
In July, the Financial Conduct Authority (FCA) then extended these breaks, which were due to end on Saturday, October 31.
But the support has now been extended once again after England went into a month-long lockdown from November 5.
The FCA said that it would keep its support for consumers under review as the Covid-19 pandemic evolved.
More to follow…
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