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23/03/2020

Coronavirus: Advice for Credit Card Holders

23/03/2020

Coronavirus: Advice for Credit Card Holders

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As the coronavirus (COVID-19) continues to develop across the country, more and more people are falling into financial difficulty, leaving them to turn to other options.

At Creditfix, we normally would advise against borrowing/further borrowing in a time of crisis. But in these unprecedented times, it may be a necessity for those struggling to get by.

For the most part, credit cards have been unaffected by the pandemic. However, the Financial Conduct Authority (FCA) has made some changes to protect consumers.

Previously, the FCA made changes to regulations for those in ‘persistent debt’, ordered lenders to contact their customers and demand an increase in their payments.

This was done as a bid to help people reduce the balances owed, and if changes weren’t made after 18 months, then cards were to be cancelled.

However, the FCA has now announced that these rules will be relaxed and asking the banks to allow people more time. It has also asked lenders to delay the cancellation of cards until at least October.

On top of this, many lenders are offering further support to any customers facing financial strife as a result of the virus.

Here we discuss the support offered, breaking down what options are available, who is providing them and how to make use of them.

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What support is available?

The majority of banks and lenders have promised forbearance, which comes in three main forms:

  • Emergency credit limit increases
  • Payment breaks
  • Waiving fees for missed payments

These measures have been put in place to give those facing financial difficulty as a result of the virus. However, it’s important to remember that it will depend on what bank or lender you’re with whether all of these will be available to you or just a few.

If you’re in debt to your credit card already, and can afford to pay even a small amount, we advise that you continue to do this. Missing payments is a risky business, even if there are no fees, as this may still affect your credit score.

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What banks are offering this support?

To make this simple, we thought we’d break this down lender by lender.

Halifax

Support available:

  • Missed payment fees have been waived
  • Emergency credit limit increases

Support Not available:

  • Waving fees for missed payments

Barclays

Support available:

  • Emergency credit limit increases

Support not available:

  • Payment breaks
  • Waiving fees for missed payments

Bank of Scotland

Support available:

  • Waiving fees for missed payments
  • Payment breaks

Support not available:

  • Emergency credit limit increases

RBS

Support available:

  • Emergency credit limit increases (however, these will be temporary)
  • Waiving fees for missed payments

Support not available:

  • Payment breaks

First Direct

Support available:

  • Payment breaks (on a case-by-case basis)
  • Emergency credit limit increases

Support not available:

  • Waiving fees for missed payments

Natwest

Support available:

  • Emergency credit limit increases

Support not available:

  • Waiving fees for missed payments
  • Payment breaks

Lloyds

Support available:

  • Waiving fees for missed payments
  • Payment breaks

Support not available:

  • Emergency credit limit increases

Nationwide

Support available:

  • Emergency credit limit increases

Support not available

  • Payment breaks
  • Waiving fees for missed payments (However, those in financial difficulty may have any interest charges cancelled)

Santander

Support available:

  • Emergency credit limit increases

Support not available:

  • Waiving fees for missed payments
  • Payment breaks

HSBC

At present, HSBC is the only bank to offer all three forms of support to their customers, with their CEO, Stuart Haire, stating:

“Our primary focus is to support you through this difficult time.

“Therefore, I want to reassure you that our objective is to continue to help you manage your financial needs digitally, over the phone and through our branch network.”

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What about other credit card providers?

The majority of other providers have yet to make any announcements offering support for their customers, although they do have designated pages surrounding the virus.

However, it was announced by Barclaycard that from March 19 they will no longer be charging anyone late payment or cash advance fees for a period of 90 days.

MBNA also announced that they will match HSBC and offer the same support options for its customers.

How do I make use of this support?

The best way to do this is to contact the provider directly to see what options are available to you. Support will be tailored to your circumstances, so it’s important to make sure you notify them as soon as anything changes.

However, we encourage you to do this online where possible as many lenders are receiving high numbers of calls these days. Whilst this is understandably frustrating, it’s important to remember that they are doing everything they can to make sure no one is stuck.

Should I take out a credit card if I’m struggling due to the virus?

Under normal circumstances, we would never advise using credit to solve your problems as it will simply make them worse.

But, in these unprecedented times, those in need might find a 0% credit card to be their saving grace.

That being said, if you do decide to this, we urge you to be careful and only use the card in emergencies. Set yourself some rules and, if possible, put the card away unless you need to use it.

If you’re already in debt to a credit card, you might find that you can cut this by using 0% transfers.

For those struggling with debt repayments who find that none of the support is enough to carry them through, contact us today for free advice. Our experts are on hand to help you find a solution that works for you; all you need to do is call 0808 2234 102 or click below to be connected.

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