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Credit Cards & Loans

Last chance to apply for Covid payment holidays

Emma Lunn
Written By:
Emma Lunn

Borrowers have just days left to apply for coronavirus-related payment holidays on mortgages, credit cards, loans and other borrowing.

The deadline for applying for the three-month payment holidays is 31 March – which is next Wednesday.

After this date, banks and building societies will no longer be required to offer formal payment deferrals to customers and will instead be expected to give tailored support to borrowers affected by the pandemic.

Most people will be able to take two three-month payment holidays with few questions asked.

How can I apply for a payment holiday?

If you’re struggling to pay your mortgage, credit card debt or a loan you have until Wednesday to apply for a three-month payment holiday.

Most banks and building societies offer the facility to apply for this online or via your online banking – or you can apply over the phone.

Once you’ve set up the deferral you won’t need to make a payment for three months. However, interest will still accrue on your debt and it will take longer, and cost more, to settle the debt.

What happens when payment holidays end?

After next week’s deadline, banks will offer ongoing tailored support for customers rather than formal payment holidays.

Further measures for struggling mortgage customers may include extending their mortgage terms, switching temporarily to an interest-only mortgage or deferring interest payments.

When it comes to credit cards and loans, lenders could offer reduced payments for a further period. Those borrowers facing longer-lasting hardship could be offered a long-term repayment plan or have their credit refinanced at an affordable rate.

Steve Wiley, CEO of Monva, said: “In short, the Covid credit card holiday is simply a deferral of payments for an agreed period. This means you would not be expected to make payments during this time, and would not fall into arrears as a result, keeping your credit score intact.

“However, in most cases, during the holiday period you will continue to be charged interest on your overall balance at your previously agreed interest rate. For those currently in high interest rate products, this could be costly and may lead to your overall debt growing and, after the payment holiday, your monthly payment will likely increase.”