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Will credit card payment holidays be extended?

Written by: Emma Lunn
Borrowers struggling to keep up with credit card and loan repayments during the coronavirus pandemic may be able to take an additional three-month payment break.

An initial three-month payment break on non-secured debt was introduced in April. Discussions are now underway between banks and the Financial Conduct Authority (FCA) to extend the break to up to six months, according to a report in the Financial Times.

According to UK Finance, about 877,800 credit card customers and approximately 608,000 personal loan customers have taken a break from making payments.

Rumours that the payment holidays on credit cards and loans could be extended come the week after the FCA confirmed that mortgage-holders would be able to take an additional three-month payment break from this month.

When it announced the mortgage payment holiday extension, the regulator said that guidance on consumer credit products would be “updated in due course”.

Interest will still be incurred on debts during a payment holiday, meaning payments will be higher when they resume. For that reason, borrowers should think carefully before taking a break from paying their credit card or personal loan.

Although payment holidays due to the coronavirus won’t have a negative impact on credit files, consumers should be aware that lenders may use information from other sources when considering future credit applications.

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