The financial regulator has confirmed that it will order lenders to extend the deadlines by which customers will have to request interest-free overdrafts of up to £ 500 in a move that will help those who have been hit hardest by the coronavirus.
Martin Lewis of MoneySavingExpert has confirmed that the new guide is now in place, with deadlines also extended for payment holidays on credit cards and shops, loans and catalog debt.
In April, the Financial Conduct Authority (FCA) announced that banks are expected to offer a temporary freeze on credit card payments and loans for three months.
As part of this, they also had to offer interest-free overdrafts of up to £ 500 in checking accounts as people’s finances got worse because of the Covid-19 pandemic.
In June, it was therefore proposed to extend the time to apply for any of these extensions or benefits until October 31, 2020 to help those affected.
And in a welcome news to customers, the extension entered into force yesterday (Friday 3 July).
Martin Lewis’ MoneySavingExpert website states that banks should contact customers who are coming to the end of their first payment block to find out if they can resume with payments. If so, you need to agree on a plan on how to refund lost payments.
Access to many FREE tools to help you stabilize your business and start making up for lost time is just a signed up newsletter. As part of our #IAmOpen community to help and support small business owners like you, you will receive a regular newsletter from our journalists and we will let you know how you can:
- get exclusive access to corporate webinars
- make a single page website landing page
- video montage created
- book an online marketing status check report e
- scholarship discounted advertising rates just made for our companions
Plus, it’s all FREE. So sign up here right now. It’s the least we can do to support you, support you and simply say THANK YOU.
However, many customers are still facing payment difficulties due to the coronavirus and banking companies have to provide support for them. This could include blocking or reducing payments on your credit card and personal loans to a level they can afford for a period of three months.
Those who already have an overdraft agreed on their main personal bank account can claim up to £ 500 without interest for another three months. Banks should also provide additional support in the form of lower interest rates on loans above the interest-free reserve for those who request it.
Any payment blocks or partial payment blocks offered under this guide should not have a negative impact on your credit files.
It is important to note that credit files are not the only source of information that lenders can use to assess creditworthiness, since Open Banking data can also be used.
In the meantime, the FCA will continue to monitor overdraft prices.
As of Tuesday (14 July), banks that previously raised interest rates on current accounts, some of which have risen to 39.9% EAR / APR, will be able to start charging these rates again.
In a statement on his site, he said: “We will keep an eye on price development, particularly during and after the coronavirus pandemic.
“We require companies to publish information on their overdraft prices in addition to the information they already publish on current account services. This information is expected to be published in August for the first time and will cover the quarter from April 1 to June 30, 2020.
“We will also conduct a post-implementation evaluation of our overall overdraft remedy package approximately 12 months after the implementation of the complete remedy package. So our evaluation will begin after April 2021.”