Coronavirus: Credit card freeze extended for three months

Banks have been told to give more time to millions of people struggling with debt owing to the coronavirus crisis. Credit card, store card, catalogue credit and personal loan customers will be able to defer repayments for another three months. The help was first ordered by the City regulator, the Financial Conduct Authority (FCA), in April.

Anyone taking advantage of the freeze must still pay back the debt at the end of the deferral period. This has prompted debt charities to warn of the potential for individuals' financial problems to simply be stored up for a later date. The FCA said that if borrowers could resume their repayments they should do so, to avoid getting into more serious difficulty in the future. Banks may also be stricter in who qualifies for the payment deferral, and might only agree to a reduction in minimum repayments.

The regulator stressed that using the payment deferral should not affect a borrower's credit rating. However, it warned that loan providers did have other ways to check on whether payment holidays had been taken, such as asking for bank statements, when making decisions on whether to agree to credit applications.

Alongside the help for credit and store cards, bank customers have already been allowed to apply for an interest-free overdraft of up to £500. The FCA confirmed that these would also be extended for three months.

Anyone wanting to take advantage for the first time can apply by the end of October.

However, the FCA has not extended the guidance that ensured overdraft customers were no worse off on price when compared with the prices they were charged before planned rule changes on overdrafts. Sarah Coles, from investment platform Hargreaves Lansdown, said: "Banks will be able to ramp up overdraft charges to the sky-high levels they were planning before this all kicked off. Suddenly you could be left paying around 40% interest on your coronavirus debts.

"This feels like an awful time to be dropping this kind of burden on people." The FCA said it did not propose to extend this temporary measure. The overdraft rules benefit some people, primarily those who had previously fallen into using unarranged overdrafts.

Although these extensions are currently proposals, banks only have until Monday to comment and the FCA expects the rules to be implemented soon after. Help for people with car finance, payday loans, rent-to-own deals, pawnbroking, and buy-now-pay-later agreements will be updated by the regulator at a later date. "The proposals would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus," said Christopher Woolard, interim chief executive at the FCA.

"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." Banks pointed out that many people would still be charged interest during payment deferrals, which would increase the debt.

Hyundai Motor Group's heir apparent is set to meet with the head of LG Group in the latest move to discuss cooperation in the electric vehicle (EV) battery business, people familiar with the matter said Monday. Hyundai Motor Group Executive Vice Chairman Chung Euisun is scheduled to meet with LG Group Chairman Koo Gwang-mo at LG Chem Ltd.'s car battery plant in Ochang, 120 kilometers south of Seoul, later in the day, they said.

LG Chem has supplied lithium-ion car batteries to Hyundai Motor's all-electric vehicles, such as the Kona EV and the Ioniq Electric. It has been recently designated as a battery supplier for Hyundai's next-generation EV to be launched in 2022.