If you took out a store 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 missed payments and interest built up over this period will be added to your outstanding balance, subject to any promotional period. This means your monthly minimum payments on your store card will go up.
Your lender will tell you how much in your fist 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.
If you’re still going to struggle to make repayments after your payment holiday has ended, it’s important you get in touch with your store card provider as soon as possible.
You can ask for another payment holiday of up to three months, but there might be options available to you.
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.
What options might your lender consider?
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.
Your missed payments will continue to be added to your outstanding balance, along with the interest.
Like your first payment holiday, this will not affect your credit file.
You have until 31 October 2020 to apply for a payment holiday.
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 store card
Reducing the interest rate on your store 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.
What’s the best way to get in touch with my store card provider?
Call centres are busy and waiting times are often long. If you can’t get through, try emailing them or going online. This also means you can prove when you contacted them, which may be helpful if they ever suggest you hadn’t.
Try to keep a record of all letters and emails between you and your creditors. If they phone you, make a note of their name and when they called.
If you’re not happy with the way a creditor has responded or behaved, make a note of the details in case you make a complaint later.
There are several template letters for different situations that may help you.
For example, National Debtline
have letters for various scenarios, including asking for a statement showing what you have left to pay on your store card and asking creditors to hold off taking action while you get advice.
Next steps if I 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.
What legal protection do I have?
The Consumer Credit Act gives you rights when dealing with creditors, such as card providers. For example, if you fall into arrears they must:
- give you time to bring your account up to date before they take any more action
- send you regular statements and arrears letters if you fall behind.
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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