How have credit card holidays changed due to Covid-19?
In April 2020, during the coronavirus lockdown, it was agreed with the government that all credit card providers should offer their existing customers the option of a three-month payment holiday.
This has now been extended to six months. If your finances have been affected by coronavirus and you want to request a credit card payment freeze from your lender, you have until 31 October 2020 to apply. If you’ve already had a three-month payment holiday, you can now request it to be extended for another three months.
These new rules are a direct response to the financial difficulties caused by coronavirus. You don’t need to have had coronavirus yourself to qualify for a payment holiday.
Can I apply if I haven't been affected by coronavirus?
Yes, you can still apply for a payment holiday if your situation has not been negatively affected by coronavirus. However, if this is the case, speak to your credit card provider to see what they can do to help.
How do I apply for a credit card payment holiday?
There are three important steps in applying:
- Speak to your lender. A payment holiday is not automatic, which means that you should not stop making minimum payments towards your credit card without first speaking to your provider. If you do this, it will be counted as a missed payment by both your provider and credit reference agencies. Missed payments are recorded on your credit file, and if your miss too many, you may be at risk of your account defaulting.
- Request a credit card payment holiday. If you're experiencing financial difficulties as a result of coronavirus and have spoken to your provider, you may be able to request a payment holiday
- Your provider makes a decision based on your situation. Most card providers will have a fast-track approval process in place at the current time, and you should have a decision quickly. If your financial situation has been affected by coronavirus, you won’t need to provide evidence or have an affordability test. You’ll simply be expected to self-certify that you have less income available to pay your credit card.
What will happen at the end of my credit card payment holiday?
At the end of a payment holiday, card providers should find out if customers can resume payments, or part payments. Your provider should contact you to agree a plan for how you will repay the missed payments.
If you take a payment holiday on your credit card account, your minimum payment will rise, because of the additional interest that has been added on during the holiday.
If you can’t afford to start making repayments, it’s very important to let your card provider know. They'll suggest options based on what will work for you.