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Also referred to as a ?payment deferral? in the FCA's recently published guidance, it's an arrangement where a lender allows a customer to make no monthly repayments, or for some lenders a token payment, for up to three months, without being considered as being in arrears.
Customers who have experienced, or are about to experience, a short-term financial impact either directly or indirectly as a result of coronavirus, can request a payment holiday. Where your credit card provider does not believe that a three month payment holiday would be in your best interests, they will consider whether a lesser term might be more appropriate, or whether any other forbearance options would be more suitable for you, given your overall financial circumstances.
If you need a payment holiday, the support that is currently available means you can apply to your lender up until 14 July. Your payment holiday will last for the agreed period of time. So, if a three-month payment holiday is agreed from 1 May, you would not be expected to make the May, June, or July monthly repayments when they are due.
Yes, this will normally be the case. Your credit card provider will advise you of their policy.
Because interest will normally continue to be charged and the amount you owe will not reduce during the payment holiday period, you will need to consider whether it is the right thing for you, especially if you are taking payment holidays on other products. This is because the amount you will owe at the end of the payment holiday will have increased. You should consider your options carefully and, if you can afford to continue making your payments, you should do so in order to keep down your overall cost of borrowing.
No, this shouldn't happen, and your credit card provider will advise how this will work.
All credit card providers are planning to do so. However, depending on your financial circumstances, some providers may offer alternative forbearance options to help customers through these difficult times. They can explain this to you.
Your credit card provider will advise you how you can request a payment holiday. You should look online in the first instance, as telephone lines are extremely busy at this time.
It is really important that you do not cancel direct debits before you have been advised by your credit card provider that a payment holiday has been granted and they will advise you whether this is necessary.
Credit card providers are doing their best to support customers during these difficult times. However, the spread of coronavirus is also having an impact on their own staff and requests for payment holidays will be dealt with as quickly as possible. We would encourage you to apply online where possible.
If you apply for a payment holiday and then miss a payment because it has not been set up in time, your card provider may be able to treat your missed payment as part of the payment holiday. You should check with your card provider whether they are able to do this.
During the payment holiday period, the monthly payments you do not make will not be reported to credit reference agencies as missed payments. Other account details, such as your outstanding balance, will continue to be reported in the usual way.
Being granted a payment holiday will not 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.
Your normal contractual monthly payments will resume. Your card provider will have informed you what is to happen to the interest that may have continued to be charged over the payment holiday period and how this will be dealt with.
At the end of the payment holiday, if you do not think you can afford to make your regular contractual payments, you should get in touch with your card provider before your next payment date to let them know.
The Money Advice Service provides information on free and impartial debt advice. This includes organisations that can provide online debt advice support, as telephone and face-to-face advice services will be very busy at the present time.
Your credit card provider will be able to explain how they will manage this situation.
Credit card providers will implement a payment holiday in a number of different ways. Your card provider will let you know if they need to change your terms and conditions.