Source: UK Finance
Customers facing temporary financial difficulties due to the coronavirus have been granted almost 1.5 million payment holidays by lenders on their credit cards and personal loans, UK Finance reveals today.
As of 21 May, 877,800 customer accounts had been given a payment freeze on their credit card. This is an increase of over a quarter (26 per cent) since the start of the month, as lenders continue to provide support to those customers with temporary financial pressures due to Covid-19.
UK Finance members have also provided almost 608,000 payment holidays on personal loans - up by 30 per cent since the start of the month - giving financial relief to those customers affected by the pandemic.
These steps taken by lenders to help people whose finances have been hit by the crisis are part of the banking and finance industry’s plan, working with the government and regulators, to help customers get through these tough times.
In addition to payment holidays, lenders have offered the option of three months of interest-free borrowing on the first £500 of arranged overdrafts for more than 27 million customer accounts. Should customers need to use this facility, any overdraft interest will be waived during the three-month period.
UK Finance revealed last week that lenders have approved 1.8 million mortgage payment holidays so far. This means that the banking and finance industry has taken decisive action across more than 30 million customer accounts - from interest-free overdrafts to credit card payment holidays - to help borrowers get through these challenging times.
Commenting, Stephen Jones, UK Finance CEO, said:
"The banking and finance industry has put a clear plan in place to help Britain through these tough times.
"Lenders have now put in place support across over 30 million customer accounts, from the option of interest-free overdrafts to payment holidays for credit cards, personal loans and mortgages.
"Banks and building societies will continue to help their customers get through the crisis and have a wide range of support available. Anyone with concerns about their financial situation should check with their lender to discuss which form of support would be the best choice for them."
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.
Lenders understand that Covid-19 is likely to have a long-term impact on some customers’ financial situation and so if customers think they may have difficulty resuming their payments at the end of the payment holiday, they are encouraged to contact their lender to understand what further support might be available.
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.
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.