The coronavirus outbreak means this is going to be an incredibly stressful period, because although this is a health-based emergency, it’s also a financial-based emergency too. The more you can do now to plan ahead will save you time and energy – and importantly, money– when you might not be feeling at your best. This guide looks at how you can best manage your money, what help is available from your account providers and what to think about if you might need to borrow money.
Things you can do right now
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First, check out our guide coronavirus, your rights and entitlements , to make sure you get everything you’re entitled to. The guide gives details of what support you might be able to claim now if you’re employed, self-employed or a gig economy worker.
If it’s possible, you need to put aside some money for if you can’t work to top up any drop in income. You’ll also need to look at what outgoings you have and work out the best ways to fund them in the short term. Follow these steps first.
If you’re self-isolating or are classed as extremely vulnerable, you might be struggling to get cash so friends, family or volunteers can get food and medicine for you. Find out what options are available to help you access your money on the UK Finance website
Step 1 Do an emergency budget
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If you’re worried about cashflow have a look at what you’re spending and what income you have coming in. You may need to cut back on as much as possible to get you through the next few weeks. It’s not going to be fun, but you’ll be pleased you did once it’s all over.
You can also use this time to think about longer-term savings using our Budget Planner tool or look at ways to cut the cost of your household bills such as switching providers for your gas, electricity or mobile phone contracts.
Step 2 Check your insurance policies
Check whether you have insurance policies that would cover your mortgage payments or replace some of your income. For example:
- Payment protection insurance
- Mortgage payment protection insurance
- Accident, sickness and unemployment insurance
These types of insurance are often offered with life insurance policies or mortgages and it’s easy to forget you have cover.
There is usually a minimum time period, which could be several months, before these policies pay out, so you should talk to your insurer to find out more, particularly if you are worried about redundancy.
Step 3 Talk to your creditors if you think you’re going to miss payments
Once you’ve done your budget if you think you’re going to struggle to pay essential bills make sure you talk to the people you owe money to before it becomes a problem.
Step 4 Use your savings
Do you have some savings you can rely on? Don’t assume you can’t get your money if it’s in a fixed term or notice savings account. Some banks and building societies are now saying you’ll be able to access them with no penalties. Check with your bank or building society if they’re able to help.
Coronavirus and your mental wellbeing
Coronavirus will have a big impact on a lot of our finances, which might negatively affect our mental wellbeing. Poor mental wellbeing might mean that you struggle to make the best money-based decisions for you, as well as act upon them. If you are feeling stressed, check out our Money problems and poor mental wellbeing guide for practical tips on how to cope financially through the pandemic, as well as where you can get free specialist help.
Remember, if you are struggling, it is always worth getting in contact with your bank, building society, lender or whoever you owe money to, to discuss your options. Many companies are aware that their customers are struggling with money at the moment and have put processes in to help. However, you can’t benefit from that help if you don’t let them know your situation.
If you are feeling very low or suicidal because of your money worries, you need to talk to someone now. Call 999 if you are in immediate danger or give the Samaritans a call on 166 123.
Help with loans and credit cards
If you’re struggling to repay loans or credit cards because of the coronavirus outbreak, you can ask for a payment freeze of up to three months.
This covers a number of borrowing options including:
- credit cards
- store cards
- personal loans
- guarantor loans
- logbook loans
- home collected credit
- loans from Community Development Finance Institution’s (CDFIs)
- some Credit Union loans.
These lenders would have to be regulated by the Financial Conduct Authority for these rules to apply.
It does not cover buy now pay later arrangements and high-cost short-term credit, such as payday loans, or some car finance deals like hire purchase or Personal Contract Purchase (PCP). The FCA has asked firms to come up with a package of support measures to help you if you have any of these types of credit and we will update our information when we know more.
How to request a payment freeze
A payment freeze might not be suitable for everybody. If you can afford your repayments you should continue to make them.
You will be able to ask for a temporary payment freeze from all lenders by 14 April 2020. But some firms, including the major banks and building societies, will allow you to request one from 9 April 2020.
This is still subject to approval by the lender, but if the payment freeze is denied, your lender should work with you to discuss other options.
Taking advantage of a temporary payment freeze because of coronavirus will not affect your credit rating.
However, it is really important you get this agreed with your lender or credit card provider before stopping payments.
Stopping payments before contacting your lender about a payment freeze, might be classed as a missed payment, result in penalty charges, show up on your credit file and impact your ability to borrow money in the future.
Call centres for banks, lenders and credit card providers are likely to be very busy. Contacting them by email or online might be a good option and means you can prove when you contacted them.
If you miss a payment
If there was a delay in arranging a payment freeze and you missed a payment, lender and providers will work with the credit ratings agencies so there will be no negative impact on your credit rating and you should not be charged any penalties.
However, you will have needed to ask for a payment freeze before the payment was due.
What your lender will discuss with you
If you request a temporary payment freeze, your lender is required to explain what this will mean for you in the future.
This will include information on any increases to your repayments after the payment freeze ends and any interest payments built up over this time.
Firms are not prevented from changing interest during the payment freeze and credit card providers might ask you to make token payments of less than £1 during this time.
Lenders and providers might decide to give you another option other than a three month payment freeze.
If you’re expecting your loss of income to be temporary, for example if you have to self-isolate, or care for someone with coronavirus but will then be returning to work, you might be offered a payment freeze of less than three months.
If you’ve only experienced a partial drop in income, you might be able to make reduced payments rather than take a payment freeze.
However, you will need to contact your lender or card provider to discuss these options.
If you’re still struggling with repayments after three months
The temporary payment freeze has been introduced for three months, but it might be extended.
If it is not extended, loan and credit card repayments will start automatically once the three month period ends.
If after the freeze you’re still finding it hard to make repayments you should contact your lender or provider to discuss your options.
If you were already struggling with repayments
If you were already having difficulties making payments before the coronavirus outbreak, these new rules will not apply to you.
Any agreements you already had in place with your lender or provider, such as reducing or cancelling further interest charges, will continue to apply.
If you’re struggling to make loan or credit card repayments you should speak to your lender or provider about what options are available to you or get debt advice.
What to do if you’re getting behind on car finance payments
If you’re struggling with your car finance payments, you might be able to get a three-month payment holiday. This will not be suitable for everyone, and if you can afford to you should continue to make payments.
If you already have an arranged overdraft with your main current account provider, you can ask for an interest-free overdraft of up to £500 for three months. Some banks are extending this to its customers automatically.
This will run for three months from the date it was agreed if you asked for it. But if your account provider offered this automatically, it will run for three months from when it was first became available.
If you don’t have an overdraft, or your overdraft is less than £500, you can request an increased limit but this will be subject to normal affordability checks from your account provider.
If you have an arranged overdraft of more than £500, your provider is only required to provide it interest free up to £500, so you will pay interest on anything over this amount.
This does not apply to fee free basic bank accounts.
Think carefully before taking advantage of this and only do so if you need temporary financial help. Remember, when the three-month period comes to an end, you will be charged interest on your overdraft.
New rules around overdrafts which came into force on 6 April 2020 are still valid.
Help with payday loans and other high cost credit
If you’re facing temporary financial difficulties because of the coronavirus outbreak and you’re struggling to repay a high-cost short-term credit loan, such as a payday loan, your lender can offer you a one-month payment deferral.
How to ask for a payment deferral
A payment deferral might not be suitable for everybody. If you can afford your repayments you should continue to make them.
To request a payment deferral you need to contact your lender.
Unlike the rules for personal loans, credit cards and car finance, for high-cost short-term credit you can only ask for a one-month payment deferral. This is because of the short-term lengths of these kinds of loan and the higher interest rates charged.
This will not be suitable for everyone. If you’re already struggling to repay the loan, or your financial difficulties are likely to last longer than one month, your lender might look at formal forbearance measures instead of a payment deferral.
If you are accepted for a payment deferral, this will not affect your credit rating during the period of the deferral. However, you should not stop payments until the deferral is agreed. If you stop payments before this, then it might be treated as a missed payment, incur charges and affect your credit rating.
You can request a payment deferral at any point up until 27 July 2020 even if this means the payment deferral taking place after this date.
The date for requesting a payment deferral might be extended.
If you miss a payment
If there was a delay in arranging a payment deferral and you missed a payment, lender will work with the credit ratings agencies so there will be no negative impact on your credit rating and you should not be charged any penalties.
However, you will have needed to ask for a payment deferral before the payment was due.
What your lender will discuss with you
If you’re requesting a payment deferral, your lender should explain what this will mean for your future repayments.
This will include information on any increase to your repayments and extensions to the term of the loan. Lenders can also extend your payment deferrals for more than one month if they choose to.
Your lender can still charge interest during this period and you might have to make token payments of less than £1 during the deferral.
There will be no additional charges during this period. So, if you meet the agreed repayments after the deferral the loan should not cost you any more than it would have done originally.
If you will still struggle to make repayments after a deferral
If you’re accepted for a payment freeze during this period, your lender will talk to you to find out if you can realistically afford to resume payments once this period is over.
If you can’t then lenders are expected to provide forbearance in line with Financial Conduct Authority (FCA) rules. This might involve a single payment at the end of the loan term or a number of smaller instalments.
Help with other kinds of credit
If you have a rent to own (RTO), buy-now pay-later (BNPL), or pawnbroking agreement, you can request a freeze or extension of up to three months if you’re facing financial difficulties due to coronavirus.
Rent to own agreements
You can request a three-month payment deferral from your rent to own (RTO) provider. However, if you can afford the repayments you should continue to make them.
You can apply for one until 27 June 2020 even if this means the payment freeze lasting until after this date. The period might be extended.
The RTO company must explain what this will mean for you, including any extension to the length of the agreement and larger monthly repayments. The company must also look at how a deferral will affect your longer-term financial situation.
Firms are not prevented from charging interest during the deferral and you might have to make small token payments.
If a three-month deferral is not appropriate in your situation, the RTO company is required to look at other options for you, including reducing interest payments, smaller monthly repayments or a longer loan term.
Any warranty or insurance you have as part of the agreement this might be extended for the length of the deferral. But if it’s not extended the company needs to make you aware of the implications of this.
If the item you bought on an RTO agreement is needed during this period, for example and cooker or refrigerator, repossessions will not take place.
If you were already in financial difficulties, and had reached an agreement with your RTO company, the arrangement is still valid.
However, if the forbearance you were offered was because of the coronavirus outbreak, then your interest payments and other charges should be waived until the end of the period agreed with your provider.
If the social distancing measures mean RTO companies are not able to take payment, collect items or repossess goods, extra charges should not be passed onto you.
Buy-now pay-later agreements
You can contact your buy-now pay-later provider (BNPL) to request a three-month payment freeze. But you should continue to make payments if you can afford to.
This is available to you until 27 June 2020 even if this means the payment freeze lasting until after this date. The period might be extended.
If successful, your provider must explain what this means for you, including extending the length of the agreement or larger monthly repayments. The company must also look at how a deferral will affect your longer-term financial situation.
Firms are not prevented from charging interest during the deferral and you might have to make small token payments.
If you’re still in a promotional period when you apply for the payment freeze, this will be extended by three months. This will apply if you’re still in the phase of the agreement where it’s interest free, or you’re not making any payments for a set-period of time.
If you were already in financial difficulties, and you had reached an agreement with the BNPL company, the arrangement is still valid.
However, if the forbearance you were offered was because of the coronavirus outbreak, then your interest payments and other charges should be waived until the end of the period agreed you’re your provider.
If you have pawned any items, the redemption period can be extended by three months, regardless of when the redemption period was due to end.
If the redemption period has already ended, the pawnbroker can’t give you notice of intention to sell the item for three months.
If notice of intention has already been given, the pawnbroker should suspend sale for three months.
If pawnbrokers are unable to take payment or collect items because of social distancing measures, no extra charges will be passed onto you.
Help if you’re struggling to pay your insurance premiums
A payment deferral might not be suitable for everyone. If you can afford your insurance payments, you should continue to make them.
If you’re struggling to pay your monthly instalments because your finances have been affected by the coronavirus outbreak, you should contact your insurer as soon as possible.
Your insurer can offer a range of options including a payment deferral of up to three months, consider whether your existing policy meets your needs, or if another product might be more suitable for you.
You might also be able to get a reduction or partial refund on your policy if your needs have changed. For example, if you used your car to get to and from work, but are now working from home.
Insurers can offer payment deferrals of longer than three months, if they think it’s in your interests.
However, a payment deferral will not be suitable for everyone, as it will mean your future payments will be much more expensive. This might be an issue for young drivers who are likely to have much more expensive policies.
This means it is important you think about how you will afford to catch up with any missed or deferred payments once the deferral period ends.
How to request a payment deferral
You can ask for a payment deferral by contacting your insurer at any time until 18 August 2020.
A payment deferral will not be suitable for everyone and if this is the case for you, your insurer will discuss what other options are available for you.
Do not stop any payments to your insurer before you’ve agreed the payment deferral, as this might count as a missed payment and result in penalty charges.
Call centres for insurers are likely to be very busy at this time. A lot of the information you need will be available on your insurers website and you can also try contacting them by email or online.
What your insurer will discuss with you
If you ask for a payment deferral, your insurer will explain what this will mean for you in the future.
This will include information on any increased payment once the deferral period ends, including any interest payments you’re charged if you’re paying in instalments.
The total cost of your policy, including fees and interest payments, cannot cost more than your original policy would have done.
Your insurer might choose to give you a payment deferral of less than three months if, for example, your loss of income is going to be temporary.
If a payment deferral is not suitable
For some people, a payment deferral will not be a suitable option. If this is the case for you, your insurer should consider more appropriate options for you including:
- moving you to a cheaper policy because your insurance needs have changed
- reduced repayments and spreading your payments out over a longer period
- waiving fees for late or missed payments
- allowing you to reschedule your payment date at no extra cost.
Your insurer will need to consider any new additional interest charges. However, the total cost of your new policy, including all fees and interest charges, cannot cost more than your existing policy.
If you’re still struggling with payments after the deferral
Once the agreed payment deferral period ends, your normal payments will start again automatically.
If you think you will still struggle to make your payments after this point, it is important to speak to your insurer to discuss your options.
If you were already struggling with insurance payments
If you were struggling to make your insurance payments before the coronavirus outbreak and already had an agreement in place with your insurer, this will continue to apply.
If you’re struggling to make your payments even under these new terms, you should contact your insurer to discuss your options.
Problems paying your mobile phone and broadband bill
At the moment there is no specific support if you’re struggling to pay your mobile phone or broadband bill.
However, if you need help you should check your provider’s website and contact them straight away to explain the situation. Many providers do have support in place to help you if your finances have been affected because of coronavirus.
This might include:
- changing your bill date
- setting up an affordable repayment plan
- moving to a different tariff
- lowering your spending cap
- only using your phone when you need to.
If you’re on a mobile phone contract, you might be able to move to a pay as you go tariff, but this might involve paying a fee to end your contract early.
If you are worried about debt
Facing a sudden drop in income if you’re already juggling other debts can have a severe impact on your finances and is probably the last thing you need right now. You may have been managing to make repayments on money you owe but this crisis is going to push you into problem debt.
Although there may be a lot going on in your life that makes it easy to ignore debt, the sooner you get help the sooner you can get back on track.
There is lots of free, confidential debt advice out there to support you and you don’t have to face the problem alone. Talking to someone can mean one less problem off your mind.
Use our debt advice locator tool
to help you find advice in a way that’s best for you: face-to-face, online or over the phone.
If you think you might have to borrow money
If you don’t have any savings and are facing an emergency cash shortfall, borrowing may feel like your only option.
Try and use borrowing as a last resort and if you need to borrow, make sure you choose the right type of credit or loan for your situation. Otherwise, you could find yourself paying more than you need to.
Shop around and compare deals, looking at:
- the interest rate and the Annual Percentage Rate (APR)
- how much you will repay in total and whether you can afford the repayments
- any penalties for missed or late payments
- the cost per week or month and whether this might vary.
Borrowing from family and friends
If you’re able to borrow some money from family or friends who can lend you the extra cash, this could be a cheap way of getting extra money without resorting to Payday lenders or other types of high cost credit. They are also likely be more flexible about how you pay the money back.
Hopefully this will be a quick and easy short-term arrangement but you might want to read our guide Borrowing money from family and friends to make sure there are no arguments further down the line, especially if they get sick and need the money back in a hurry.
Personal loans and credit cards
If you’re thinking about getting a new loan or credit card, it’s particularly important now to think about if you can afford the repayments as your circumstances could change quickly because of the coronavirus outbreak.
Your credit rating affects the cost of your borrowing and it’s important to shop around and do some research on comparison sites.
If you’re only going to have to cope with a drop in income for a couple of weeks a payday loan could seem like a really quick fix to help you until you’re back at work again.
However, there are a number of traps you could fall into with payday loans if you don’t know what you’re letting yourself in for.
Other types of borrowing
Loans from credit unions are much cheaper than from other lenders and you can pay the money back at a rate you can afford.
Find out more about borrowing from credit unions.
If you’ve been turned down for credit by high street lenders, then you can look at fair finance providers. Their interest rates are lower than high-cost credit providers but higher than a credit union. Repayments are based on an affordability assessment which ensures the borrower can keep up with the repayments.
Pawnbrokers are another option where you leave something valuable, such as jewellery, as security for a loan. The rate of interest you will be charged is normally lower than a high street bank and it’s unlikely you will get the full value of the item, but you will get a quick decision.
High cost credit – things to think about
If your credit rating isn’t so great, cheaper borrowing may not be an option for you and you may be tempted by other forms of high cost credit, such as logbook loans or doorstep loans to see you through the crisis.
These forms of credit can work out to be very expensive and you need to think very carefully before you decide to borrow in this way. Before you make a decision read our guides.
Avoid loan sharks
Loan sharks are illegal lenders who often target people who are desperate and who can’t get mainstream credit. They might seem friendly at first but borrowing from them is never a good idea – even if you feel you have no other options.
Before you take out any credit or loan, take a look at our Help with loans