If your credit card payment holiday ends soon, the good news is there’s still help available. So, if you can’t pay your credit card bill at all, or you can’t pay the full amount, here’s what to do next.
When do credit card payment holidays end?
You’ll probably get a letter from your lender reminding you that the credit card payment holiday ends shortly. Generally speaking, they’ll give you two options:
- Start paying your credit card again as normal (i.e. make at least the minimum monthly payment).
- Contact your lender to discuss a payment plan.
Let’s take a closer look at these options so you can decide the best option for you.
I can pay my credit card – what do I do?
In short, if you can afford the minimum monthly repayments, it might be best to start paying again. Here’s how to go about it:
- Unless you cancelled your Direct Debit (DD), it’ll automatically start again. So you don’t need to do anything.
- If you cancelled your DD, simply set up a new one online or by phoning your lender.
Just make sure you can actually afford the monthly repayments – otherwise, you could end up damaging your credit score.
What if I can’t make the minimum payment?
First, don’t panic. More than 961,000 people applied for a credit card payment holiday during the coronavirus pandemic, so lenders understand things might not be easy.
What’s most important is that you contact your lender and explain your situation. Here are some steps to follow:
- Prepare a note of your income and expenditure. This helps prove to your lender that you’re genuinely struggling to make payments.
- Contact your lender and ask what help is available. They may offer support like:
- Interest-only repayments (if this is less than the minimum monthly payment)
- Waiving interest on your repayments, so they’re slightly less than before
- Changing the payment due date (e.g. so that you don’t pay your bill until you’ve been paid)
- A custom payment arrangement, if you’re really struggling to make any payments
The FCA expects lenders to work with people to set up reasonable payment plans. So, you should be treated fairly.
But if you’re worried about speaking to your lender after your credit card payment holiday, or you don’t think they’re treating you properly, here’s what to do:
- Contact Citizens Advice. They can negotiate with your lender on your behalf.
- Contact the Money Advice Service for independent advice.
- Raise a complaint with your lender. They’ll investigate the situation and discuss what happens next.
Will my credit score be affected if I need extra help?
It’s likely, yes. It all depends on what help you get.
Since the credit card payment holidays end on 31 October, missed payments after this date will go on your file.
Some repayment plans go on your credit file – it depends on how much you’re paying, and the lender’s own rules. Check with your credit card provider.
Your lender should tell you if extra support affects your credit score. That way, you can decide what to do.
Can I just ignore the end of my credit card payment holiday?
When a credit card payment holiday ends, you might be tempted to ignore your debt problem and hope that it goes away. The truth is, though, that it’s much easier to take control of your debt and work out a payment plan with your lender.
Here’s what could happen if you simply ignore your credit card debt:
- You’ll be charged interest on outstanding payments.
- You may also incur late payment fees.
- Multiple missed payments will certainly lower your credit score, which will make it hard to get credit down the line.
- If you continue missing payments, or you don’t stick to a payment plan, your lender might take enforcement action against you. This includes referring the debt to debt collectors.
In other words, it’s crucial you tell your lender what’s going on.
Remember, credit card payment holidays are just temporary payment breaks. Hopefully, you can now pay at least the minimum monthly amount, but if you can’t, it’s important you act now.
Contact your lender and tell them what’s happening, and work out a payment plan sooner rather than later.
If you’re feeling overwhelmed, remember you can always get free support from Citizens Advice or the Money Advice Service.
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