Customers under financial stress offered repayment breaks on credit cards and personal loans
Banks have started offering repayment deferrals on credit cards and personal loans following a major move to allow home loan holders to take repayment holidays.
Money
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Banks have started offering repayment deferrals on credit cards and personal loans for those in financial distress.
Just days after banks revealed they were offering home loan repayment holidays, this has now extended to credit card and personal loan products.
Latest statistics by the Reserve Bank of Australia show Australians owe $42.7 billion on personal credit card and of those balances including interest is $27.4 billion.
ING, one of the nation’s largest banks behind the big four, has today revealed it has started offering the deferral of credit card payments for cash-strapped customers.
It will be only available to customers who are impacted by the COVID-19 pandemic.
During this payment pause customers will not be able to use their credit cards or personal loan products.
The bank will consider other options before customers are able to go through with the repayment pauses of up to six months.
On many credit cards customers are being charged exorbitant rates of 20 per cent or more.
Other big banks have also told News Corp they are considering similar rescue packages offered to their home loan customers by extending it to credit card customers.
Financial comparison website RateCity spokeswoman Sally Tindall said it was “great to see” customers being offered a break during the coronavirus pandemic.
“People already burdened with credit card debt, who have now lost their job or are too sick to work, are unlikely to be able to keep up with their repayments,” he said.
“Instead of copping extra late fees on top of the interest charges, this will give them a genuine reprieve.
“Credit card and personal loan rates can in many cases be brutal.”
Financial adviser Scott Haywood said for Australians in financial distress they should look to freeze higher interest debts first.
“They should freeze credit cards and personal loans before a mortgage if they do have a mortgage,” he said.
“Australians have had an appetite for debt at all levels however now people need to address the higher interest that they are paying and figure out a way in their budget to mitigate it.
“Now it’s time to bunker down as we are in our homes with our spending.”
He warned against freezing all loans customers may have “because you’ll have no access to funds”.