COVID-19 Update for individuals - Overdrafts and credit payment holidays

From Thursday 9 April, the first £500 of all authorised overdrafts may be interest-free and all credit cards, store cards, personal loans and catalogues may offer payment holidays.

The FCA has proposed emergency measures, via a speeded up consultation process, that for those struggling due to coronavirus the first £500 of authorised overdrafts can be interest-free for up to three months (for overdrafts under £500, the entire balance will be interest-free).

 The consultation also proposes that all lenders will be required to move to offering payment holidays of up to three months on personal loans, credit cards, store cards and catalogue debt. This follows on from the mortgage payment holidays as covered in our earlier article ‘Deferring mortgage payments’

 Tim Davison, Chartered Financial Planner for Shaw Gibbs warns

“Don’t stop your payments at this point, firstly the consultation needs to be ratified. If it is, you need to speak to all of the lenders in question and agree the overdraft or payment holiday with them. The proposal is this will not hurt your creditworthiness and there should be no penalties or charges’