If you're a credit card holder and struggling to make your monthly payments, new legislation has come in which is set to help. The new measures mean that, in much the same way as you're able to apply for a mortgage payment holiday, you can now apply for a 3- month payment holiday on your credit cards too.
What Is A Credit Card Payment Holiday?
A credit card payment holiday means repayments on your credit cards will be paused for 3 months. If your application for a payment holiday is accepted, it's likely your bank will change the terms of your agreement for those 3 months to offer no minimum payment requirement or at least a very nominal fee during this time. At the end of the 3 months, your minimum payment will be reinstated and as payments are usually based on a percentage of the total you owe, this may increase after the holiday period.
If you're interested in applying for a credit card payment holiday, we advise you speak to your bank to discuss the terms and whether this is the right thing for you.
Will Taking A Credit Card Payment Holiday Affect My Credit Score?
There's some good news here - the answer is no, your payment holiday at this time should not affect your credit score. This is because the 3 big credit -referencing agencies, Equifax, TransUnion & Experian have all worked together to ensure credit scores are protected during this difficult and unusual time. The key here is that you must have agreed the payment holiday with your lender. If you have done this, the referencing agencies have put in place an 'Emergency Payment Freeze' which means your score is frozen too.
Please remember, if an official payment holiday has not been agreed and if you simply stop your repayments, your credit score may be damaged.
Things To Consider Before Taking A Credit Card Payment Holiday
Before considering a payment holiday, it's important you have the full picture. For your application to be successful, the credit card will need to be in your name, and it's likely you'll need to be up to date with your payments. If this is not the case, it's advisable to contact your bank directly to discuss your options.
If you take a holiday, you should still be able to use your credit card during this time at the same level of interest. Do remember that interest and payments will be added to your balance at the end of the 3 month period so your monthly payments will increase in future. This may also mean it will take longer to pay back overall due to interest.
It's important to remember to check with your bank if you have a Direct Debit paying the full amount each month, rather than the minimum payment, as this will probably need to be altered.
Is My Bank Offering A Credit Card Payment Holiday?
Banks have been ordered to offer credit card payment holidays as of 9th April. Some banks are also currently waiving fees for missed payments and offering emergency credit limit increases.
There is more information below on whether some of the major banks are offering payment holidays and how to apply.
| Bank | Offering Payment Holidays? | How To Apply | |------------------|----------------------------|-------------------------| | Bank of Scotland | Yes | Online Form | | Barclays | Yes | Online Form | | Halifax | Yes | Online Form | | HSBC | Yes | Online Form | | Lloyds | Yes | Online Form | | Nationwide | Yes | Online Form | | NatWest | Contact back directly | Contact through the app | | RBS | Contact back directly | Contact through the app | | Santander | Yes | Online Form |
Contact Us For More Information
If you have any questions about mortgage holidays or any other financial support available during the Covid-19 outbreak, please call the Covid-19 Small Business Support Team on 01442 953871 (8:30am - 5:30pm, Monday-Thursday. 9am - 5pm, Friday). Or, take a look at our Covid-19 Small Business Support information hub.