Help with Overdrafts during the COVID-19 Pandemic

Help with Overdrafts during the COVID-19 Pandemic

23/06/2020

The COVID-19 pandemic has created financial challenges for many households in Scotland. For some, this will increase the need to make use of overdraft facilities in the coming months.

There have been several changes to overdrafts in recent times. Read on to find out how this may affect you.

Since 9 April 2020, individuals who have been affected by COVID-19 can ask their bank for up to £500 of interest free overdraft borrowing for 3 months. Recently, the timeline for requesting this was extended until 31 October 2020.

New updates also state that, if you have already taken advantage of a 3 month interest free period, you can ask for a further three months, if you cannot pay due to financial difficulties caused by the pandemic.

There are some restrictions to this, however, that it may be worth being aware of. Individuals must have had an overdraft on their bank account already, and this measure applies to personal current accounts, not Basic Bank Accounts.

This measure will prove particularly helpful for many, considering other changes to overdrafts that were announced earlier in 2020. In January, the FCA reported that banks would be required to eliminate daily overdraft fees, and just charge interest on any money owed. This change led to several banks increasing their rates earlier in the year. A word of caution therefore, to be aware of potentially expensive overdrawn balances when the interest free measures are brought to an end.

While the interest free period will come as welcome relief to many, for some this will not be enough to end the long-term cycle of debt. If you live in Scotland, and have over £4,000 of unsecured debt, get in touch with us today and we will let you know all the options available to you.

You can reach us 6 days a week on 0141 300 5656 or you can book a call back below.

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