Coronavirus payment deferrals on credit cards: what they were and their legacy

Coronavirus payment deferrals on credit cards were a temporary scheme run under Financial Conduct Authority (FCA) guidance between April 2020 and July 2021. They let a cardholder stop or reduce their monthly payments for a set period without being treated as in arrears, and without the deferral being recorded as a missed payment on their credit file. The scheme is closed: the last date to ask for a deferral was 31 March 2021, and firms were told not to provide deferrals for payments extending beyond 31 July 2021¹.

The scheme was used heavily. By late October 2020, more than 4.4 million payment deferrals had been granted across credit products, including 1.1 million credit card deferrals, and 323,700 payment holidays were still in place, of which 97,300 were on credit cards². Applications were made by contacting the lender, with most major banks and building societies offering online forms or internet banking routes².

A deferral was not debt relief. Interest generally kept accruing during the break, so balances grew and minimum payments rose afterwards². What the guidance changed was that no fee could be charged for arranging a deferral, the deferral should not have been reported as a worsening status on the credit file, and card use should not have been suspended¹. This page explains how each of those rules worked, where they stopped, and what support exists now.

The coronavirus scheme has ended: what it was

In March 2020, the government announced that borrowers whose finances had been affected by covid-19 could apply for a three-month payment holiday on their mortgage, credit card or personal loan². For credit cards, the FCA turned this into formal guidance for firms, first published on 9 April 2020, updated with effect from 3 July 2020, and updated again with effect from 25 November 2020³.

The guidance applied to regulated firms that issue credit cards and retail revolving credit products, such as store card issuers and catalogue lenders, and to firms that had acquired these debts. It did not apply to business credit cards¹. A "payment deferral" was defined as an arrangement made on or after 9 April 2020 under which a firm permitted the customer to make no payments or reduced payments for a specified period, without considering them to be in arrears³.

The scheme was extended several times as the pandemic continued. The July 2020 version of the guidance was originally due to expire on 31 October 2020 unless renewed or updated³, and consumer bodies argued for a further extension, with Which? recommending that payment holidays be extended by three months and that it was too early to return to the existing forbearance rules⁴. The final version, in force from 25 November 2020, set the 31 March 2021 cut-off for new requests and the 31 July 2021 outer limit¹.

Once the scheme closed, the support did not vanish but changed form. Banks moved to offering ongoing tailored support for customers rather than formal payment holidays². The FCA's later Tailored Support Guidance, part of its work on borrowers in financial difficulty, states that firms are expected to offer forbearance before a customer misses a payment if the customer contacts the firm to say they are experiencing, or reasonably expect to experience, payment difficulties⁵. So the answer to "can I still get one?" is no, but the duty to help a struggling cardholder did not end with the scheme.

Up to 6 months in total, no more than 3 at a time

The final guidance set two limits on how much could be deferred. A firm should not give a single payment deferral in respect of more than 3 monthly payments¹. And over the whole period from 9 April 2020 to 31 July 2021, the maximum number of monthly payments a firm should defer under the guidance was 6 monthly payments, per regulated credit agreement¹.

The structure worked in stages. A customer who had not yet had a deferral and was experiencing, or reasonably expected to experience, temporary payment difficulties due to coronavirus could get an initial deferral of 3 monthly payments³. A customer who was still in difficulty at the end of that first deferral could be offered a further full or partial deferral, reducing payments for a period of 3 months to a level the customer indicated they could afford³. Two consecutive deferral periods were allowed, but the combined total could not exceed the 6-month cap, and no deferral could cover payments beyond 31 July 2021¹.

The 31 March 2021 deadline applied to eligible customers seeking a first deferral, and to those whose previous deferrals totalled less than 6 months¹. In practice, individual lenders set their own application windows within the wider scheme: HSBC and first direct, for example, accepted three-month credit card payment holiday requests until 20 June 2020⁴. Barclays offered three-month payment holidays to customers who had not missed any Barclaycard payments between September 2019 and February 2020, overlooking missed payments in March and April⁴.

Deferrals were per agreement, so a customer with more than one credit card could in principle request a deferral on each. The 6-month maximum was counted per regulated credit agreement, not per customer¹. Where a buy now pay later agreement was provided on a retail running-account product, the 6-payment maximum also included any payment deferrals given exclusively under the separate rent-to-own, buy-now-pay-later and pawnbroking deferral guidance¹.

Full or partial deferral: how each one worked

The guidance recognised two forms of deferral, and the difference mattered for what a customer actually paid.

A full payment deferral meant the firm permitted the customer to make no payments at all. Where a firm's systems would not allow a zero payment, a token payment not exceeding £1 counted as a full deferral¹. A partial payment deferral meant the customer was permitted to make payments above £1 but under the contractual minimum repayment amount¹. The further deferral offered to customers still in difficulty after a first deferral could be either form, set at a level the customer indicated they could afford³.

Both forms carried the same core protections. The customer should have had no liability to pay any charge or fee in connection with the permitting of a full or partial payment deferral, or of a different solution where a deferral was deemed not to be in the customer's interests¹. And in either case the firm should not have reported a worsening status on the customer's credit file during the deferral period¹.

A deferral was not the only option, and the guidance did not require one. Firms were told that a deferral should only be granted where it was appropriate: where a customer could afford to resume payments, or where a different solution was in the customer's interests, the firm could offer something else instead, and that alternative too should carry no fee¹. Some lenders went further on their own terms during the pandemic: Nationwide, for instance, offered a three-month payment holiday reducing monthly payments to £1 for members who were up to date, alongside removal of interest charges for members in financial difficulty⁴.

No fees, and interest waived only for those still struggling

The fee position was simple: no charge or fee in connection with permitting a full or partial payment deferral, or a different solution where a deferral was deemed not in the customer's interests¹. Lenders confirmed this in practice, with Lloyds Banking Group stating there were no fees for missed credit card payments under its repayment holidays⁴.

The interest position was more complicated, and it is the part many cardholders got wrong. Interest generally continued to accrue during a deferral². Any extra interest accrued was added to the balance, so minimum payments rose after the holiday ended². StepChange puts it plainly: a credit card payment holiday is when your provider lets you stop payments for a while, but the provider will allow interest to build up while the holiday is in place, and minimum payments will rise because of the interest added during that time⁶. You still have to pay the full amount and any interest added during the break⁶.

There was one important exception. At the end of the deferral period, if the customer was still in payment difficulties and was provided with forbearance under the FCA's Tailored Support Guidance, then any interest that would not have accrued over the payment deferral period but for the deferral should have been waived as soon as reasonably practicable¹. In other words, the interest waiver was tied to continuing hardship, not to the deferral itself.

Where the customer was no longer in payment difficulties at the end of the deferral period, firms did not need to waive the interest that had accrued as a result of the deferral, irrespective of how many deferrals had been taken¹. A cardholder who deferred three months, returned to work, and resumed normal payments kept the extra interest on their balance. A cardholder who needed further structured help should have had that interest removed.

Credit files: deferrals were not to be reported as missed payments

The credit file rule was one of the scheme's central promises. Firms should not report a worsening status on the customer's credit file during any payment deferral period¹. The July 2020 guidance said the same, in accordance with the Coronavirus Data Reporting Guidance published by the credit reference agencies in consultation with the FCA³.

What this meant in practice: a deferral taken under the guidance should not appear on a credit report as a missed payment. StepChange confirms that a payment holiday is not marked as a missed payment on your credit file⁶, and the same was said of mortgage payment holidays⁷. Which? reported at the time that payment holidays taken out before the deadline would not show up on your credit report².

Two caveats applied, and they still matter for anyone reading their file today. First, the absence of a worsening status did not make a borrower invisible: lenders could take other information into account when making future lending decisions, including information provided by applicants and bank account information³. Second, help received after the formal scheme closed could be recorded under the normal reporting process. Which? reported that additional help received after the deadline might be marked on your file², and that anyone still receiving financial help from a provider, or seeking help for the first time, would have that aid reported on their credit report in accordance with the normal process⁴. StepChange's general guidance on payment breaks for debt repayments notes that the gap in payments may be marked on your credit file and can make it harder to get credit in future⁸.

Mistakes happened, and there is a route to fix them. The Financial Ombudsman Service published a case study involving a customer, Hinesh, who noticed two missed payments marked on his credit file shortly after a repayment holiday⁹. The FCA's July 2020 guidance anticipated exactly this kind of operational failure: where customers had been unable to reach timely agreement because of a firm's operational difficulties and subsequently missed a payment that was reported to their credit file, firms were expected to work with customers and credit reference agencies to ensure necessary rectifications were made, so that no worsening status was recorded in respect of the deferral period, and to ensure no default or arrears charges were levied for payments missed in those circumstances³.

If a deferral from the scheme is showing on your file as a missed payment, the first step is to raise it with the card provider and ask for the file to be corrected. If the firm does not resolve it, the complaint can go to the Financial Ombudsman Service. The ombudsman's case studies from the period show it examined whether firms followed the guidance, including a case where a bank refused a payment holiday and later apologised and changed its approach after the ombudsman explained the guidance's scope¹⁰. Our page on how credit cards affect your credit file explains how entries are recorded and corrected generally.

Card use and persistent debt rules during a deferral

A deferral did not mean the card was frozen. Under the guidance, customers whose payments were deferred should not have had the use of their card or credit facility suspended, except where the firm acted under section 98A of the Consumer Credit Act 1974, for example because of fraud or a significantly increased risk of the customer being unable to repay¹. So a cardholder on a full deferral could in principle keep spending, within their credit limit, throughout the break.

The guidance also switched off the FCA's persistent debt rules for deferred customers. The persistent debt remedies in the FCA Handbook (CONC 6.7.27R to 6.7.40G) were suspended for customers granted an initial or further payment deferral, for the duration of any deferral period, including two consecutive deferral periods; the provisions resumed when the deferral ended³. The rule change was made formally: the FCA's coronavirus instrument disapplied those provisions for customers allowed to defer repayments under the temporary guidance, for the period of the deferment¹¹, and the same exclusion appears in the Handbook text for the updated guidance¹¹.

This mattered because the persistent debt rules otherwise require firms to act where a customer has been paying more in interest, fees and charges than in repaying the balance over an 18-month period. Under those rules, a firm should only suspend or cancel a customer's credit card where this is objectively justified¹², and firms could retain card use where suspension would have a significant adverse impact on the customer's financial situation, for example dependence on the card for essential living expenses such as mortgage, rent, council tax, food and utility bills¹³. The rules do not apply to credit card products promoted solely for business purposes¹³, and they also apply to customers in arrears unless they are already receiving forbearance at least as favourable as the rules require¹².

The suspension of these rules during a deferral cut both ways. It protected deferred customers from escalating remedies while their payments were paused, but it also paused the protections those remedies bring, including the requirement for the firm to prompt the customer towards faster repayment. When the deferral ended, the rules resumed³. Our pages on the persistent debt rules and on what happens when you cannot afford higher repayments set out how the rules work outside the pandemic scheme.

Where the deferral protections did not reach

The guidance's protections were specific to deferrals granted under it, and several groups fell outside them.

• Business credit cards were excluded from the guidance altogether¹.
• Customers already in difficulty before the pandemic were not the scheme's target. The parallel car finance measures, for example, stated plainly that they were not intended for drivers already in financial difficulties before the outbreak¹⁴.
• Help after the scheme closed was recorded differently: support received or sought after the deadline was reported on the credit file under the normal process⁴, unlike deferrals under the guidance.
• Interest waivers did not apply to customers who were no longer in payment difficulties at the end of the deferral period¹.
• The deferral did not reduce the debt. Interest and charges might still be added during a holiday⁸, and the full amount remained payable afterwards⁶.

The end of the scheme was designed to avoid a sudden stop. The Building Societies Association reported at the time that there would be no "cliff edge" moment at the end of borrowers' existing payment holiday¹⁵. Official Scottish Government statistics later noted that covid-19 mortgage payment holidays came to an end in April 2021 and that this had not resulted in an increase in arrears in the period examined¹⁶. Those mortgage holidays were also not classified as technical arrears in the statistics¹⁶.

It is also worth separating the deferral scheme from other covid-era measures that ran on their own timetables. The FCA issued separate temporary guidance for overdrafts, which likewise did not apply to private banks and credit unions, and separate guidance for insurance premiums, where insurers were expected to allow payment holidays on monthly premiums for one to three months, or longer if in the policyholder's interest⁴. A credit card deferral did not automatically extend to these products.

Store cards, buy now pay later and short-term borrowing

The deferral guidance covered more than credit cards. It applied to regulated firms issuing credit cards and retail revolving credit products, which the FCA defined to include store card issuers and catalogue lenders, and to firms that had acquired these debts¹. So a deferral under the guidance could be requested on a store card or catalogue account on the same terms: up to 3 monthly payments at a time, 6 in total, no fee, and no worsening status on the credit file¹.

Store cards themselves work in the same way as credit cards but often charge higher rates of interest and can only be used to pay for goods in that chain of shops; nidirect guidance notes that unless you plan on paying off the full balance straight away, they can often work out to be twice as expensive as credit cards¹⁷. Our page on store cards and retailer credit covers how these products work.

Buy now pay later sat in a more awkward position during the pandemic, because most of it was then unregulated. Where a BNPL agreement was provided on a retail running-account product, the 6-payment maximum included any payment deferrals given exclusively under the separate rent-to-own, BNPL and pawnbroking deferral guidance¹. BNPL has since changed fundamentally: the FCA started regulating Deferred Payment Credit, often known as buy now pay later, on 15 July 2026¹⁸, bringing affordability checks, access to the Financial Ombudsman Service and Section 75 protection on eligible purchases. StepChange notes that BNPL now has similar protections to credit cards under the Consumer Credit Act¹⁹, and that if you do not make payments or pay off the full amount in the set time, you will be charged interest and extra fees¹⁹.

For purchases made before regulation, the fallback was chargeback. Citizens Advice guidance notes that you can start a chargeback claim with the credit card provider you are using to make payments to your buy now pay later account, for purchases made before 15 July 2026²⁰. Our pages on chargeback and Section 75 explain both routes.

Short-term credit more broadly was covered by the FCA's general expectation that firms support customers in difficulty, and the Tailored Support Guidance's expectation that firms offer forbearance before a missed payment where a customer contacts them about payment difficulties⁵. That expectation outlived the deferral scheme and applies to regulated credit today.

If you still have debt from a deferral: where to get help

A deferral pushed interest into the balance, and for some cardholders that balance is still there. If you are carrying debt that grew during a payment holiday, the starting point is your card provider. Under the persistent debt rules, your credit card provider has to contact you and offer you help when you are in persistent debt, and if you are still in persistent debt at 36 months, it must contact you again and give you options for increasing payments so that you repay the balance more quickly²¹. Card providers were also expected to find out whether customers could afford to restart payments at the end of a payment holiday and to contact them to agree a plan for repaying missed payments⁶.

Beyond your provider, free help is available:

• StepChange explains the full range of options for dealing with card debt, including informal arrangements where creditors may stop interest and charges for a short time²², and dedicated guidance on credit card debt.
• National Debtline and Citizens Advice provide free, independent debt advice.
• In Scotland, the Debt Arrangement Scheme allows a payment break of up to six months where you have a sudden and short-term drop in income of 50% or more²³, and our page on credit card debt in Scotland covers the options there.
• Breathing Space, the debt respite scheme, can pause enforcement, but it is not a payment holiday and does not write off debt²⁴.

If you believe your provider mishandled a deferral, whether by charging a fee, suspending your card, or recording missed payments on your credit file, you can complain to the firm and then to the Financial Ombudsman Service, whose case studies show it examined firms' conduct under the guidance⁹. Our page on complaining about a credit card provider sets out the process step by step, and help with credit card debt covers the debt solutions themselves.