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.
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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.
Our advisers will point you in the right direction.
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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.
Check whether you have insurance policies that would cover your mortgage payments or replace some of your income. For example:
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.
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.
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.
Join our Facebook group, Coronavirus and your Moneyopens in new window for money news and updates as soon as we get them, as well as a place to ask money questions, share worries and help others out.
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.
If you’re struggling to repay loans or credit cards because of the coronavirus outbreak, you can ask for a payment holiday, also known as a payment freeze, of up to three months.
This covers a number of borrowing options including:
These lenders would have to be regulated by the Financial Conduct Authority for these rules to apply.
A payment holiday might not be suitable for everybody. If you can afford your repayments you should continue to make them.
You have until 31 October 2020 to apply for a payment holiday.
This is still subject to approval by the lender, but if the payment holiday is denied, your lender should work with you to discuss other options.
Taking advantage of a temporary payment holiday because of coronavirus will not affect your credit file.
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 holiday, 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 there was a delay in arranging a payment holiday 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 file and you should not be charged any penalties.
However, you will have needed to ask for a payment holiday before the payment was due.
If you request a temporary payment holiday, 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 your payment holiday ends and any interest payments built up over this time.
Firms are not prevented from changing interest during your payment holiday 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 holiday.
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 holiday 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 holiday.
However, you will need to contact your lender or card provider to discuss these options.
If you’re still going to struggle to make repayments after the payment holiday has ended, you can request another payment holiday for up to another three months.
If you can afford to start making full or partial repayments, it’s in your interests to do so.
You should contact your lender to discuss your options.
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.
If you’re struggling with your car finance payments, you might be able to get a 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. If you have not got this automatically, you have until 31 October 2020 to ask for it.
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’re still in financial difficulties after three months, you can ask for it to be extended for another three months.
Bear in mind that when your interest-free period ends, the interest rate you’ll be charged will revert to what it was before. Typically this rate will be around 40%.
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.
You may be able to apply for a special lower interest rate from your bank on arranged overdrafts above £500 if you are experiencing or expect to experience temporary financial difficulties because of coronavirus.
If you apply for this lower interest rate and you also have an interest-free overdraft of up to £500, you will only pay this lower interest rate on any arranged overdraft balance over £500.
The special lower interest rate offered by your bank may not be cheap and you should consider alternative forms of affordable borrowing before applying.
Remember, when the interest-free or lower interest rate period comes to an end, you will be charged interest on your overdraft at the rate you previously agreed, which is typically 40%.
You should think carefully before taking advantage of any overdraft support offered by your bank and only do so if you need temporary financial help.
None of this support applies to fee free basic bank accounts.
New rules around overdrafts which came into force on 6 April 2020 are still valid.
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 holiday, also known as a freeze.
A payment deferral might not be suitable for everybody. If you can afford your repayments you should continue to make them.
You have until 31 October 2020 to request a payment holiday from 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 holiday. This is because of the short-term lengths of these kinds of loan and the higher interest rates charged.
You can only get one payment holiday for each payday loan or other high cost credit agreement.
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 holiday.
If you are accepted for a payment holiday, this will not affect your credit file during the period of the deferral. However, you should not stop payments until the holiday is agreed. If you stop payments before this, then it might be treated as a missed payment, incur charges and affect your credit file.
You can request a payment holiday at any point up until 27 July 2020 even if this means the payment holiday taking place after this date.
The date for requesting a payment holiday might be extended.
If there was a delay in arranging a payment holiday and you missed a payment, lender will work with the credit ratings agencies so there will be no negative impact on your credit file and you should not be charged any penalties.
However, you will have needed to ask for a payment holiday before the payment was due.
If you’re requesting a payment holiday, 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 holiday 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 holiday the loan should not cost you any more than it would have done originally.
If you’re accepted for a payment holiday 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.
You can’t get a second payment holiday on payday loans or other forms of high-cost credit.
If you have a rent to own (RTO), buy-now pay-later (BNPL), or pawnbroking agreement, you can request a holiday, also known as a payment freeze, of up to three months if you’re facing financial difficulties due to coronavirus.
You can request a three-month payment holiday 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 31 October 2020 even if this means the payment holiday lasting until after this date.
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 payment holiday will affect your longer-term financial situation.
Firms are not prevented from charging interest during the holiday and you might have to make small token payments.
If a three-month holiday 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 holiday. But if it’s not extended the company needs to make you aware of the implications of this.
The ban on repossessions for items bought under a RTO agreement will continue until 31 October 2020.
If you’re still struggling to make payments after the holiday has ended, your RTO company can freeze or reduce payments for a further three months.
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.
You can contact your buy-now pay-later provider (BNPL) to request a three-month payment holiday. But you should continue to make payments if you can afford to.
This is available to you until 31 October 2020 even if this means the payment holiday lasting until after this date.
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 holiday will affect your longer-term financial situation.
Firms are not prevented from charging interest during the holiday and you might have to make small token payments.
If you’re still in a promotional period when you apply for the payment holiday, 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.
If you’re still struggling to make payments after the holiday has ended, your BNPL company can freeze or reduce payments for a further three months. If you’re still in your promotional period, this will also be extended if you get a second payment holiday.
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 you’re still struggling financially after the extension, your pawnbroker can extend the redemption period. This includes agreeing not to sell the item during this time.
If pawnbrokers are unable to take payment or collect items because of social distancing measures, no extra charges will be passed onto you.
A payment holiday 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 holiday 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 holidays of longer than three months, if they think it’s in your interests.
However, a payment holiday 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 payments once the holiday period ends.
You can ask for a payment holiday by contacting your insurer at any time until 31 October 2020.
A payment holiday 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 holiday, 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.
If you ask for a payment holiday, your insurer will explain what this will mean for you in the future.
This will include information on any increased payment once the holidayperiod 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 holiday of less than three months if, for example, your loss of income is going to be temporary.
For some people, a payment holiday will not be a suitable option. If this is the case for you, your insurer should consider more appropriate options for you including:
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.
Once the agreed payment holiday 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 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.
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:
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.
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.
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:
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.
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.
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.
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.