The UK’s Financial Conduct Authority (FCA) has proposed to extend the credit card payments freeze by another three months for consumers affected by the Covid-19 pandemic.
The proposal applies to credit card, revolving credit lines, personal loan and overdraft customers whose payment freeze is coming to an end.
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For the customers who are yet to request a payment freeze or an interest-free overdraft of up to £500 can apply until October 2020.
For those who have already applied but are still facing financial difficulties, the FCA has advised firms to continue providing payment deferrals or reduce the repayments.
The payment freezes offered under this guidance will not affect the credit rating of the consumers negatively.
FCA interim CEO Christopher Woolard said: “The proposals we have announced today would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus.
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By GlobalData“Where consumers can afford to make payments, it is in their best long-term interest to do so, but for those who need help, it will be there.”
The regulator said that the proposals are not meant for the whole market and only for impacted consumers.
For instance, overdraft consumers can request reduced interest rates on the additional borrowings of over £500.
FCA added that the guidance does not apply to motor finance, high-cost short-term credit, rent-to-own, pawnbroking, and buy-now-pay-later credit lines.
