Lenders approve nearly 1.5m payment holidays
Figures from UK Finance, the trade body, show that of 21 May, 877,800 credit cards had been given a payment freeze. This is an increase of more than a quarter (26%) since the start of the month.
UK Finance members have also provided almost 608,000 payment holidays on personal loans, up by 30% since the start of the month.
In addition, lenders have offered the option of three months of interest-free borrowing on the first £500 of arranged overdrafts for more than 27 million current accounts.
The Financial Conduct Authority (FCA) announced in April that banks and building societies should offer payment breaks to customers facing payment difficulties as a result of Covid-19.
Stephen Jones, CEO of UK Finance, says: “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. This could include speaking to an independent debt charity to talk through their options.
Customers shouldn’t cancel 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.
UK Finance revealed last week that lenders have approved 1.8 million mortgage payment holidays so far.