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The Financial Conduct Authority (FCA) has announced that it is suspending banks’ obligation to suspend the credit cards of those in persistent debt who have not responded to their lender’s communications about their debt due to the concern of the Covid-19 outbreak on consumer’s finances.
The credit card persistent debt rules, which were starting to come into effect, would have given banks the ability to suspend credit cards held by customers who were in persistent debt. While the rule will still stand, the FCA has stated that customers will have until 1 October 2020 to respond to their bank’s communications about their persistent credit card debt. As a result of this, firms are not obliged to suspend customers’ credit card accounts due to persistent debt, even if they have already received communication from their bank about this.
Commenting on this announcement by the FCA, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Those who may have already been finding it difficult to keep up with their minimum credit card payments before the Covid-19 outbreak may find some comfort in the FCA’s decision to suspend its credit card persistent debt rules. If anyone is worried about managing their finances in this difficult time, they should consider speaking with an advisory service and contacting their finance provider to discuss possible solutions to any concerns as early as possible.”
The credit card persistent debt rules were introduced by the FCA with the aim of helping consumers in persistent credit card debt repay their debt. The FCA classifies those in persistent debt as consumers in a cycle of debt for at least three years. Banks are obliged to contact these customers to discuss repayment plans and if the customer does not respond to the communication, they will have the ability to suspend the customer’s credit card.
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The average cost of a small loan has fallen sharply from this time last year, but a 0% credit card could still be the cheapest way to borrow £3,000 or less, new research shows.
The average cost of a small loan has fallen sharply from this time last year, but a 0% credit card could still be the cheapest way to borrow £3,000 or less.