Payment holidays for important financial commitments such as mortgages, credit cards and personal loans were first issued in March. They had been designed in order to help those whose finances were affected by the COVID-19 crisis, and later extended as difficulties continued. Payment holidays involve breaks from regular payments to help people get back on their feet.
They have provided many with the opportunity to reassess their finances ahead of starting repayments again.
But as Britain enters the final month of payment holidays in their current form, there are important steps to take as the measures come to a close.
Express.co.uk spoke to Chris Lilly, lead publisher at finder.com who offered advice on the steps Britons should be taking at this time.
He first focused on those with a mortgage payment holiday, stating: “Mortgage lenders know that not everybody is going to be able to simply pick up where they left off.
This, Mr Lilly explained, is likely to help with the interest of mortgage payments.
However, for those on differing payment holiday arrangements, for example relating to their credit card or borrowing habits, there are slightly varying steps to take.
Mr Lilly continued: “Credit cards have the advantage that you can usually opt to pay only a small minimum monthly repayment, but the disadvantage that – outside of promotional low or no-interest periods – they tend to charge a relatively high rate of interest.
“This can mean that, over time, the cost of borrowing on a credit card can be extremely high.
“Card issuers are now obliged to work with cardholders that are struggling to make a dent in their credit card debt.
“If you have multiple debts outstanding, a general rule of thumb is that what you can afford to pay each month should primarily go towards the most expensive debts first, while cheaper debts receive only the minimum to avoid defaulting.
“If you are able to transfer your debts to a lower rate, now may be the time to do so.”
An important point of consideration, though, is money management.
Reducing monthly outgoings is likely to be a good way to eliminate any unnecessary spending and streamline finances.
Mr Lilly concluded by stating Britons can seek free advice and assistance on money matters.
This, he said, is available through reputable sources such as the government’s Money Advice Service.
Although payment holidays are scheduled to end, this does not mean support will also conclude.
The Financial Conduct Authority (FCA) has told lenders they should now be considering how they can help their customers going forward.
Help is therefore likely to come through tailored support measures which fit a person’s individual circumstances.
Published at Thu, 01 Oct 2020 03:01:00 +0000