Nowadays, everyone uses credit cards for bill payments and many other purchases. In many cases, people also have to take a loan to maintain their livelihood. But sometimes certain situations may occur in their life when they can struggle financially and can’t make the payment of the interest as well as the credit card payment.
In this situation, you may ask your creditor to freeze the interest, which will help you to clear your debts and keep you on the right track. You may tell your creditor about your financial difficulties and request to freeze the interest over a certain period of time.
No specific banking guideline will force any creditor to freeze their interest, rather it’s up to the creditor to consider this. As in the present scenario, the financial status of many people has been affected very badly due to coronavirus, the Financial Conduct Authority has made new payment measures to help the people. In this blog, here we will discuss the process of freezing interest rates on loans and credit card in the UK. So, without wasting any more time please keep reading our blog and get to know more about loans and credit card payments freeze.
Will a creditor stop interest and charges?
There are several important codes of practice in the credit industry which tell that a creditor may consider reducing the charges and interests on debt on any type of financial difficulty. The majority of the creditors and lenders are signed under the Standard Board Lending Code and The credit service association code of practice which states to freeze interest on debt in any type of financial difficulty.
In a practical scenario, it might be very difficult for a creditor to continue adding interests over a longer period when you are in financial difficulties. The creditor may send the debt to a collection agency when you have an arrear on your account.
When you are in a sort of financial struggle and can’t pay the debts, you may need to apply to freeze the charges and interests. In those cases, you need to describe your financial situation to your creditor. The creditor will ask about some information like your income, expenditure, and other debts to consider about freezing the interest.
Will the interest and charges be added to the debt?
The interest and charges would only be added to the debt if you have signed a credit agreement on which these are included. On the other hand, it might be considered unfair, if your creditor has any discrepancy regarding false charges or interests and you may file a complaint on it.
If your rates of interest increase due to the failure of payment of the debt or your creditor increases the interest rates and charges for the financial difficulties you may consider this is an unfair situation.
In other cases, your creditor may also apply extra charges like legal cause or solicitor charges to a debt or adding extra charges as collection fees, which may also be considered as an unfair situation. For all these above situations, you may file a complaint against your creditor.
Would we get any help to stop the interest and charges?
If you can prove your financial difficulty, your creditor will stop the interest and charges in most cases. Otherwise, you can get online help, where you need to make a budget that will help you to pay the debts. Some esteemed financial institutions like Individual voluntary arrangements will help to stop the interest and charges.
On the other hand, you may choose another plan to solve this type of situation. There are a number of debt management plans (DMP) available in the market that you will avail of to resolve all your issues related to the debt. In such cases, your creditors must not be forced to stop the interest and charges. Though there’s no surety that the creditor will stop the interest or not.
In the above section, we have discussed the process of Loans and credit card payment freezing the interest and charges on your debt. The entire process and other factors have been described here thoroughly. Those who don’t have any idea on how to stop the interest and charges on the debt will definitely get a clear idea about it. For any more queries related to this topic, you may contact us through the comment section. We would be happy to help you out!