Derin Clark

Derin Clark

Online Reporter
Published: 09/04/2020

Banks will be able to offer interest-free overdrafts for three months on borrowing of up to £500 for existing customers with arranged overdrafts to help those impacted by the Coronavirus pandemic, it was revealed today.

The interest-free overdrafts are part of a number of measures the Financial Conduct Authority (FCA), which regulates the UK finance industry, expects banks to implement to help consumers who have faced financial difficulties due to the pandemic.

Other measures being introduced are:

  • Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by Coronavirus
  • Make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
  • Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.

According to the FCA these changes will come into force today and the full range of measures will apply from Tuesday 14 April 2020. Commenting on the measures, Christopher Woolard, interim Chief Executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.

“Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.

“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”

Consumers impacted by the Coronavirus pandemic are urged to contact their bank or building society directly, with most preferring customer to contact them online, to find out what additional services are available to help them cope financially during their period.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

smiling businessman holding coffee cup

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy