Source: UK Finance
Lenders have provided over one million payment deferrals on credit cards to help customers whose finances have been affected by Covid-19 over the past three months, according to figures published today by UK Finance.
The trade body’s members have also provided almost 707,000 payment deferrals on personal loans for customers impacted by the pandemic. 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.
This unprecedented support for consumer credit borrowers has been put in place by the banking and finance industry and Financial Conduct Authority (FCA) to help people facing temporary financial pressures due to the Covid-19 outbreak. It forms part of a clear plan by the industry to help the country through these tough times, including granting 1.9 million mortgage payment deferrals, increasing the contactless limit to £45 and providing £46 billion of lending to over 1.1 million businesses through government Covid-19 lending schemes.
On 1 July 2020 the FCA published guidance outlining the next steps for customers who are coming to the end of their credit support arrangement. Those customers who are able to return to making regular payments are encouraged to do so as soon as possible, as this will keep down the overall cost of borrowing. For customers with longer-term financial difficulties, lenders are offering continued help and flexibility to suit their needs.
Customers 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 on their circumstances 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.
Those customers who are yet to request a payment deferral or an arranged interest-free overdraft of up to £500 will have until 31 October 2020 to apply for one. Customers are reminded that a payment deferral may not be the right choice for everyone, and lenders have a range of options to help.
Eric Leenders, Managing Director of Personal Finance, 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.”