The UK government has told banks to give more time to millions of people struggling with debts owing to the coronavirus crisis.
Credit card, store card, catalogue credit and personal loan customers will be able to defer repayments for another three months.
The help was first ordered by the City regulator, the Financial Conduct Authority (FCA), in April.
Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period.
This has prompted debt charities to warn of the potential for individuals’ financial problems to simply be stored up for a later date.
The FCA said that if borrowers could resume their repayments they should do so, to avoid getting into more serious difficulty in the future. Banks may also be stricter in who qualifies for the payment deferral, and might only agree to a reduction in minimum repayments.
The regulator stressed that using the payment deferral should not affect a borrower’s credit rating. However, it warned that loan providers did have other ways to check on whether payment holidays had been taken, such as asking for bank statements, when making decisions on whether to agree to credit applications.
Although these extensions are currently proposals, banks only have until Monday to comment and the FCA expects the rules to be implemented soon after.
Help for people with car finance, payday loans, rent-to-own deals, pawnbroking, and buy-now-pay-later agreements will be updated by the regulator at a later date.
Most Banks are currently offering interest free overdraft up to a certain amount with reduced interest rate.
Check for details on your banks website. Most application can be done online.
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