Consumer credit support

Supporting credit card and personal loan customers through Covid-19 payment difficulties 

Lenders are committed to supporting customers throughout the Covid-19 pandemic.  Since April 2020, working with the Financial Conduct Authority (FCA), lenders have provided payment deferrals. These are sometimes also referred to as ‘payment holidays’ and were in response to the sudden financial impact of Covid-19 on personal finances. Under the FCA’s guidance, customers could apply for payment deferrals up to 31 March 2021.  The FCA has also confirmed that all payment deferrals must end by 31 July 2021.   

Where you still require support after 31 March 2021, there are a number of different scenarios, including what is called ‘tailored support’, which will be focussed on your individual circumstances:

  • If you have already received payment deferrals for a total period of six months, your credit card or personal loan provider will provide tailored support;
  • If you were on a payment deferral as at 31 March, your credit card or personal loan provider may be able to extend this, subject to a maximum of six months deferrals and where all payment deferrals need to end by 31 July 2021;
  • If you have not previously taken a payment deferral, this will not now be an option and your credit card or personal loan provider will instead provide tailored support. 

If you are concerned about your finances, it remains essential that you contact your credit card or personal loan provider before you miss a payment. You can do this through your mobile or online banking services – telephone services are also available, but it may just take a little longer to get through. Your credit card or personal loan provider’s website will also be updated with the latest information, including FAQs, which should answer most 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 up to three-months, without being considered as being in arrears. Customers needed to apply for an initial payment deferral by 31 March 2021.   

  1. Can I extend an existing payment deferral? 

Customers on an existing payment deferral at  31 March 2021 can be considered for an extension to this, up to a maximum of six months deferrals and where all payment deferrals must end by 31 July 2021.  Where your provider does not believe that such an extension is in your interests, but further support is required, they will instead provide tailored support.     

  1. Will I still get charged interest if I have taken a payment deferral, or if I’m receiving tailored support from my provider? 

Yes, this will normally be the case where you are benefitting from a payment deferral. 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 payment 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.  

Where you are receiving tailored support, your provider will explain what this means in terms of interest charges and will depend on the type of support that has been provided and your circumstances. 

  1. 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 really important. Providers want to understand whether you can now resume your payments, or whether you need tailored support because you may be experiencing longer term financial difficulties. It is essential that you engage with your provider to 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. 

  1. How long do I have to apply? 

If you have not yet had a payment deferral, it is no longer possible to apply, but lenders will still help you with tailored support.    

If you are already on a payment deferral at or after 31 March 2021 and you have not had six months payment deferrals in total, you can continue to request a further deferral to run consecutively with the end of your existing deferral after 31 March 2021. All deferrals will however need to end by 31 July 2021, whether or not you have had a total of six months of deferrals. 

  1. I’ve already had six months of payment deferrals, what support is available to me?  

If you have already taken six months of payment deferrals, but still require support, providers will offer other tailored support options.  This can be short or longer term support, depending on the circumstances and can include: 

  • accepting reduced payments for a further short period where your circumstances are expected to improve 
  • accepting reduced payments via a longer-term repayment plan where you are experiencing more severe financial difficulties 
  • considering whether the refinancing of the outstanding credit at a sustainably affordable payment rate is an option which will be in your interest 

Providers will explain to you what the tailored support being offered means, including whether contractual payments on the account would be considered to be in arrears.  

  1. 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.   

  1. Will taking a payment deferral, or more tailored support, have an impact on my credit file? 

During a 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.  

Where you require tailored support, this will be reported on your credit file in line with your provider’s standard policy. This may, for example, include indicating where a reduced repayment arrangement has been agreed with you. This helps to ensure that an accurate reflection of your circumstances is recorded at the credit reference agencies. 

  1. I received a payment deferral, 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? 

Your provider may have informed you up front that this may happen and what you should do. If you are unsure, you should contact your provider.  

  1. Can I still use my credit card? 

Being granted a payment deferral will not automatically impact on your ability to use your credit card. However, card providers are able to suspend card use in accordance with their usual business practices. They will advise you if they need to do this and what to do if you feel you need to continue to use the credit card for essential living expenses. 

If you are now receiving tailored support, your card provider will advise you whether it is still possible to use the credit card, which will be dependent on the type of support being provided and your overall circumstances.  

  1. Where can I get more general debt advice? 

If you feel 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 can be very busy at the present time.   

  1. I’ve received letters about being in ‘persistent debt’ on my credit card - can I still have a payment deferral? 

It is no longer possible to apply for an initial payment deferral.  However, you should still contact your provider to discuss what other options are available to you.  They will take into account the current position in relation to the persistent debt.