If your finances are impacted due to COVID-19, you can still apply for a payment holiday (meaning you needn’t make repayments) by the end of the month and you’ll get three months almost automatically. Payment holidays are available on mortgages, overdrafts, credit cards, personal loans, insurance, and motor finance. However, although the pandemic is far from over, this support scheme is being removed on 31 October and there is little that can be done after that.

Before taking a payment holiday, it is important to bear in mind that you should only take one if you need it as interest will continue to be charged. Many wrongly assume interest is frozen if you take a payment holiday – this is not the case and interest will still accrue. Additionally, the fact you are not making repayments will result in a higher outstanding balance on which further interest will be charged.

If, however, due to COVID-19, you are experiencing financial difficulties, it is far better to take a payment holiday than miss payments without agreement as this can impact your ability to get future credit.

Currently, these specific COVID-19 payment holidays do not go on your credit file but lenders can factor them in to lending decisions after spotting it via your application forms or your payment history. However, once the payment holiday is over and you’ve made a few repayments, there should not be much of an impact.

So, if you don’t really need a three month payment holiday, don’t take it. However, if you’re struggling financially, do apply now and get the help you need.

Remember you only have a few short days left in which to submit your claim.