New COVID overdraft rules are on the way

People who have a temporary three-month interestfree overdraft buffer will be able to request another one under measures confirmed by finance watchdogs.

The Financial Conduct Authority (FCA) said customers who are negatively affected by coronavirus and who already have an arranged overdraft on their main personal current account can request up to £500 interest-free for a further three months.

The regulator says these customers should also be provided with further support where it is needed – including reducing the cost of borrowing above the interest-free buffer, especially if this cost of borrowing would otherwise increase.

Customers who have not yet had a payment freeze or an arranged interest-free overdraft of up to £500 and experience temporary financial difficulty due to coronavirus would be able to request one up until October 31.

The new guidance came into force yesterday.

The FCA also confirmed further support for credit card, store card and personal loan customers.

Customers yet to request a payment freeze will have until October 31 to apply for one.

Christopher Woolard, interim chief executive at the FCA, said: "Since the coronavirus crisis began, we have made support available for those borrowers financially affected by the pandemic. For those who are now in a position to restart payments, it will be in their best interests to do so. But for those who still need it, the package we are confirming today ensures there is help and further support."