CREDIT card borrowers will be offered lower repayments if they’re still struggling with their money after a payment freeze, under new proposals by the financial watchdog.
Lenders will be expected to offer the additional help to those who continue to be impacted financially by the coronavirus crisis.
Firms should contact customers to find out if they can continue to make repayments after their payment holiday.
If they’re still struggling, help should then be offered for an additional three months after a payment freeze has finished.
As well as reduced repayments, struggling households could also be offered a complete deferral of payments.
For customers who’ve yet to apply for a payment freeze, the deadline for doing this will also be extended until 31 October 2020.
This deadline will also apply to those who have yet to apply for an arranged interest-free overdraft of up to £500.
In addition, customers who already have an arranged interest-free overdraft on their main current account will also get more support if their finances are still being hit by coronavirus – this will include interest rates on borrowing above the interest-free buffer and repayment plans.
Any further help that gets approved by lenders won’t have an impact on the credit file of borrowers.
The new measures have been announced today under a proposal by the Financial Conduct Authority (FCA), which will now speak to lenders before finalising the guidance.
Christopher Woolard, interim chief executive at the FCA, said: “We have been working closely with other authorities, lenders and debt charities to support consumers in the current emergency.
“The proposals we’ve announced today would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus.
“Where consumers can afford to make payments, it is in their best long-term interest to do so, but for those who need help, it will be there.”