Coronavirus: what it means for mortgages, credit cards, loans, and savings
The government, financial regulator and some of the UK’s biggest banks have announced a range of measures to help customers who face financial difficulties if they are affected by the coronavirus pandemic.
The latest move comes from the Financial Conduct Authority (FCA), which has instructed banks to offer customers affected by the crisis credit card and loan payment holidays as well as overdraft interest freezes for three months and is now turning towards helping motor finance and high-cost credit borrowers.
This comes on top of new measures including three-month mortgage payment holidays for homeowners and landlords, renters being offered protection against eviction and some banks allowing savers to access money held in fixed-term accounts early without penalty. Find out which measures have been put in place to aid your finances during the coronavirus crisis.
- The FCA’s new borrowing relief measures
- Payment holidays for personal loans
- What are credit card providers doing to help?
- Which banks are offering interest-free overdrafts?
- Mortgage payment holidays
- How will payment holidays affect your credit score?
- Help for tenants facing eviction
- Accessing money in fixed savings accounts
- Using cash and making payments by card
- Reduced bank branch opening hours Universal Credit and other benefits
- Which? news and advice on coronavirus
The FCA’s new borrowing relief measures
On 2 April, the FCA proposed a range of temporary measures to offer support to people struggling with their finances due to the coronavirus pandemic.
It wrote to banks suggesting they implement the following rules:
- Firms should offer a three-month payment freeze on loans and credit cards for consumers facing financial difficulties as a result of coronavirus.
- Customers who have already been financially affected should be charged zero interest on overdrafts of up to £500 for three months.
- Firms should ensure all overdraft customers are no worse off than they were before the recent changes to overdraft pricing came into force.
- Firms should ensure none of these temporary measures will affect credit ratings.
The FCA requested responses from lenders by 6 April and says that the measures would come into force by 9 April. That deadline has come, and some lenders have used it as an opportunity to improve what they are offering customers.
On 17 April, the FCA proposed further measures for motor finance and high-cost credit customers.
It is suggesting car finance firms should provide a three-month payment freeze for those who are having temporary difficulties meeting finance or leasing payments on a vehicle, as well as proposing that firms should not make ‘unfair’ changes to customer contracts.
Payday loan firms may be instructed to offer a one-month interest-free payment freeze to those who’ve been financially impacted by the coronavirus outbreak, while three-month payment freezes could be on the cards for those signed up to pawnbroking, rent to own (RTO) and buy now pay later (BNPL) agreements.
It is inviting responses from stakeholders until 20 April, after which time the measures will be rolled out.