Millions of consumers to benefit from Covid-19 financial support

UK consumers facing temporary financial difficulties due to coronavirus have been granted nearly 1.5 million payment holidays by lenders on their credit cards and personal loans.

As of May 21, 877,800 customer accounts had been given a payment freeze on their credit card.

This is an increase of more than a quarter (26%) since the start of last month as lenders continued to support people with temporary financial pressures due to Covid-19.

The figures from banking industry body UK Finance also show its members had also provided nearly 608,000 payment holidays on personal loans, up by 30% since the start of the month.

These steps taken by lenders to help people whose finances have been hit by Covid-19 are part of the banking and finance industry’s plan, working with government and regulators, to help customers get through the crisis.

In addition to payment holidays, lenders have offered the option of three months of interest-free borrowing on the first £500 of arranged overdrafts for more than 27m customer accounts.

Should people need to use this facility, any overdraft interest will be waived during the threemonth period.

Last month, UK Finance revealed lenders had approved 1.8m mortgage payment holidays since the start of the Covid-19 outbreak. This means the industry has taken action across more than 30m customer accounts to help borrowers get through challenging times.

UK Finance chief executive Stephen Jones said: “The banking and finance industry has put a clear plan in place to help Britain.

“Lenders have now put in place support across over 30 million customer accounts, from the option of interest-free overdrafts to payment holidays for credit cards, personal loans and mortgages.

“Banks and building societies will continue to help their customers get through the crisis and have a wide range of support available.

“Anyone with concerns about their financial situation should check with their lender to discuss which form of support would be the best choice for them.”

Interest will normally continue to be charged during payment holidays, so UK Finance has advised customers to consider their options carefully and only apply if they are facing temporary financial difficulties and need immediate help.

Customers in more severe financial difficulty should speak to their lender about the most appropriate action to take, which could mean going to an independent debt charity to talk through the options and agree a way forward.

UK Finance added: “Lenders understand Covid-19 is likely to have a long-term impact on some customers’ financial situation. Firms are constantly keeping their websites updated with the latest information, including FAQs, which can answer many queries.

“For more detailed questions there are a range of different ways to get in touch. Customers should not cancel their direct debits or standing orders on unsecured credit products before a payment holiday has been agreed, as this will be counted as a missed payment and could negatively impact their credit file.”

“Check with your lender to discuss which form of support would be the best choice”

SUPPORT: Special measures have been taken affecting 30 million accounts of customers running short of funds