If you took out a credit card payment holiday because of the coronavirus outbreak and its now come to an end, it’s a good idea to understand what happens next, and what option are available to you if you’re still going to struggle to make repayments.
What happens when your payment holiday is over?
Your repayments will automatically start again once your payment holiday has ended. So it’s important to know what date your repayments will start again.
Any interest payments built up over this period will be added to your outstanding balance, so your monthly minimum payments on your credit card will go up.
Your lender will tell you how much in your first statement after your payment holiday ends.
If you can afford to make your payments again, you don’t need to do anything as they will restart automatically.
What options might your lender consider?
Changing your payment due date
If it will benefit you, your lender can change you payment due date. For example, to just after you get paid.
Reducing interest rates on your credit card
Reducing the interest rate on your credit card might make your repayments more manageable, or reduce the rate at which your outstanding balance is increasing.
However, you will still need to be able to pay off at least the minimum amount each month.
Putting together a realistic payment plan
If your finances have been badly affected by the coronavirus outbreak, your lender might put together a different repayment plan.
This might include a combination of things to make your repayments more manageable.
Lenders are required to work with you to work out a repayment plan based on your circumstances.
Impact of further support on your credit file
If your lender does offer you further support once your payment holiday ends, this will be recorded on your credit file. This could mean that you may find it more difficult to borrow money in the future.
Make sure you’ve claimed everything you’re entitled to
Make an emergency budget
If you’re worried about cashflow, have a look at what you’re spending and what income you have coming in.
Look at how to cut your household bills, such as switching providers for your gas, electricity or mobile phone contracts.
Next steps if you have missed a payment
If you have missed a payment contact your lender to explain your situation. You should avoid taking out more credit unless you know you can afford to pay it back.
These guides can help you with how to talk to your lender:
When to get debt advice
If you’ve already missed payments and are not able to come to an agreement with your lender, it’s best to get advice as soon you can, especially if you’ve got other debts as well.
Find out more on the StepChange website
about how debts are collected when you are in arrears.
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