23/03/2020

COVID-19: Advice for Credit Card Holders

23/03/2020

COVID-19: Advice for Credit Card Holders

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With coronavirus (COVID-19) spreading all over the country, it’s not just our health that’s affected; it’s our finances too.

This goes for not those currently ill, but even those who have avoided the virus so far. As businesses shut down and a lockdown being discussed as a real possibility, people face not receiving their full salary, if any at all – which may leave them no choice but to turn to other avenues such as credit cards to help them get by.

The government has made no calls relating to credit cards legislation and support so far, but the Financial Conduct Authority (FCA) did make some announcements to help protect those affected by the virus.

In September, there were regulation changes made to try and get those considered to be in ‘persistent debt’ to reduce their balances. Banks were ordered to send payment demands to customers and give them 18 months to make arrangements before cancelling their cards.

However, this has now been delayed. The FCA has now told lenders to hold off on the cancellation of cards until October to allow time for the virus to pass and for people to come to an arrangement to pay back what they owe.

Additionally, banks are also setting up and offering their own support to customers whose finances have been impacted by the virus.

As such, we thought we’d break this down for you in a guide to help you know what support is available and where to find it.

What support is being offered?

Most banks and lenders have put measures in place to allow them to keep their promise of forbearance during this time of crisis.

The three main support options available are payment holidays, credit limit increases and the abandonment of missed/late payment fees.

What options you are entitled to will depend on your bank or provider, and for the most part will be offered on a case by case basis.

We do advise, however, that if you can afford to pay something to your credit card during this time – even if it’s only a small amount – to do so. Defaulting can still have an impact on your credit rating, and lenders will look on you more favourably in the end.

Who is offering support?

Support is being offered by pretty much all banks, including:

All of the banks listed above have options available to those experiencing financial difficulty as a result of the virus.

Other providers such as Barclaycard are offering their customers further support by waiving their charges for late payments and cash advance fees for a period of 90 days. This began on March 19.

How do I get support if I need it?

Understandably, it isn’t wise to try and visit a bank branch in the current climate and most lenders are asking their customers to avoid calling unless it’s necessary or an emergency.

As such, we advise to do your banking online where possible to find support. Whilst we know this isn’t ideal for everyone, we urge you to remember that they are working as best they can to accommodate everyone.

It’s also important to make sure you notify the bank as soon as possible if your circumstances change to allow them to offer you help that’s suited to your situation. By doing so, you can help prevent any problems escalating and relieve yourself of some stress.

I’m struggling due to the virus, is it a good idea to take out a credit card to help me?

We would never normally advise the use of credit to help with money worries as it will only cause you more problems.

But, given the current pandemic, it seems that this may be the only option for some people to get by.

If you can, apply for a 0% credit card to avoid interest charges for a period of time. However, our advice is that, if you choose to turn to credit cards during this time, do so with caution.

Set yourself limits, and only use the card in dire emergencies. This will help prevent you from running up a high balance in the long run. If you can, keep it hidden somewhere to avoid temptation.

If you’re already in debt to a credit card, then going through a 0% balance transfer to another card could cut your balance down considerably.

If you’re struggling with debts, and the support available isn’t enough to let you get by, we can help. We offer free and confidential advice to help you work through your debts and find a solution that’s tailored to your circumstances; contact us today on 0808 2085 195 or click below to be connected to an advisor.

You could write off up to 75% of unsecured debt with our debt assistant.

Get free advice

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