Consumer credit support

Lenders are committed to supporting customers through these tough times. There is a range of support available for customers whose finances have been impacted by Covid-19. This includes payment deferrals on credit cards and personal loans, as well as an up-to £500 interest-free buffer on overdrafts.

If you are concerned about your finances during this time, you should look at your lender’s website. This will be updated with the latest information, including FAQs, which can answer many queries.

This page covers both credit cards and personal loans. For ease of reference, we refer to firms who provide such products as ‘providers’.  

  1. What is a payment deferral?
    This is an arrangement where a provider allows a customer to make no monthly repayments, or a partial payment, for a period of three-months, without being considered as being in arrears.
     
  2. Will I be eligible for a payment deferral?
    Customers who have experienced, or expect to experience, a short-term financial impact as a result of coronavirus can request a new payment deferral, or can be considered for an extension to a previously granted deferral.

    Where your provider does not believe that a new or extended payment deferral would be in your interests, they will consider whether a lesser term, or a partial deferral, might be more appropriate. They may also consider whether any other options would be more suitable and helpful for you, given your overall financial circumstances. A payment deferral will not be appropriate where you are able to afford your normal contractual payments and where you have not indicated that these circumstances are likely to change.
     
  3. Will I still get charged interest if I take a payment deferral?
    Yes, this will normally be the case. Your provider will advise you of its policy.

    Because the amount you owe will not reduce during the payment deferral period, you will need to consider whether it is the right option for you, especially if you are taking a further deferral, or taking similar breaks on other products. This is because the amount you will owe at the end of the deferral will have increased because of interest that has been applied. You should consider your options carefully and, if you can afford to continue making your payments, you should do so, as this will keep down your overall cost of borrowing.
     
  4. I am currently employed and able to afford my repayments and there is nothing to indicate that my situation will change, but I am nervous about the state of the economy. Should I take a payment deferral just in case?
    In these circumstances, a payment deferral will not be right for you. Where you can afford to make your credit card payments, you should continue to do so, as this will keep down your overall cost of borrowing.
  1. Why might my provider have refused to give me a payment deferral?
    Your provider will have assessed your request and concluded that there was a reason why this was not considered to be in your interests. They will explain this to you and, if they believe you need a different type of temporary support, or longer term support, they will let you know how else they can help. You may also be referred to independent debt advice.
     
  2. I’m currently on a payment deferral and my provider has written to me asking me to speak to them, or to go online, to answer some questions. Do I have to do this and what will happen if I don’t?
    This is a really important part of the payment deferral process. Providers want to understand whether you can now resume your payments, whether you need further temporary support, or whether you may be experiencing longer term financial difficulties. It is essential that you answer these questions accurately. If you decide you do not wish to provide this information, your provider will assume you are able to resume your regular contractual payments.
     
  3. How long do I have to apply?
    If you believe you may need a payment deferral, you can apply up to 31 October 2020. It will last for the agreed period of time. So, if a three-month payment deferral was agreed from 1 July, you would not be expected to make the July, August, or September repayments when they are due.
     
  4. If I have not yet taken a payment deferral, but do so before 31 October, am I entitled to another one when that finishes?
    First of all, you should consider carefully whether you need to apply, as it will be better for you to continue to make your payments, in order to keep down your overall cost of borrowing. All deferrals, including any extensions, must be applied for by 31 October, so if your first deferral does not end before then you will not be entitled to a further one under the FCA’s recent guidance, though your provider should be able to help you if you believe you still need support. We would always recommend speaking to your provider as soon as you can if you think you will struggle with your payment.
     
  5. Would I lose my credit card promotional rate if I took a payment deferral?
    No, this should not happen. Your provider will advise how this will work. 
     
  6. Are all providers offering payment deferrals?
    Yes, all providers are doing so. However, depending on your financial circumstances, some may offer alternative types of support to help their customers through these difficult times. They can explain this to you. 
  1. How can I get information and how do I apply for the payment deferral?
    Your provider will advise you how you can request a new payment deferral, or an extension to one that was previously agreed. Try to look online in the first instance, if you can, as telephone lines are still very busy. The online processes have been designed to be straightforward for customers and so it could also save you time.

    It is really important that you do not cancel direct debits before you have been advised by your provider that a payment deferral has been granted.
     
  2. How long will my provider take to process my application?
    Providers are doing their best to support customers during these difficult times. However, the impact of coronavirus has also affected their own staff and requests for payment deferrals will be dealt with as quickly as possible. We would encourage you to apply online where possible.

    If you apply for a payment deferral and then miss a payment because it has not been set up in time, your provider may be able to treat your missed payment as part of the payment deferral. You should check with them whether they are able to do this.
     
  3. Will taking a payment deferral have an impact on my credit file?
    During the payment deferral period, the monthly payments you do not make will not be reported to credit reference agencies as a worsening arrears. However, it is important to be aware that credit files are just one factor that providers use when making lending decisions. They may use a wide range of other information, including for example by reviewing your bank statements and through an assessment of your overall use of credit products and levels of borrowing.
     
  4. I received a payment deferral for 3 months, but have now received a ‘notice of sums in arrears’ (NOSIA) from my bank, telling me I’ve missed a payment that was due during my payment deferral. What should I do?
    The law requires these to be sent where two or more contractual payments have been missed. Your provider may have informed you up front that this may happen. You do not need to do anything more if you have an agreed payment deferral in place.

    Some providers may have been able to set up the payment deferral through changing or exercising rights within your contract, so that deferrals do not trigger the sending of the NOSIA, whilst other firms may be operating on a different basis, where it is still triggered. Even though these NOSIA are sent, the position set out at Q13, regarding your credit file, remains the same.
     
  5. Can I still use my credit card?
    Being granted a payment deferral will not normally impact on your ability to use your credit card. Card providers are however able to suspend card use in accordance with their usual business practices. They will advise you if they need to do this and also what to do if you feel you need to continue to use the credit card for essential living expenses.
     
  6. Where can I get more general debt advice?
    If you feel that you need debt advice because for example, you have a number of unmanageable debts across a number of lenders, you should not delay getting help – the sooner you have a clear picture of your options, the quicker you can start to manage things.

    The Money Advice Service provides information on free and impartial debt advice. This includes organisations that can provide online support, as telephone and face-to-face advice services are very busy at the present time.  https://www.moneyadviceservice.org.uk/en/tools/debt-advice-locator 
     
  7. I’ve received letters about being in ‘persistent debt’ on my credit card and recently agreed a payment plan – can I still have a payment deferral?
    Being in persistent debt will not automatically disqualify you from a payment deferral and your provider will grant one if it is in your interests to do so. Your credit card provider will be able to explain how the deferral will impact upon requirements in relation to persistent debt.
     
  8. Does a payment deferral mean that my terms and conditions are to change?
    Providers will implement a payment deferral in a number of different ways. Your provider will let you know if they need to change your terms and conditions.