If you’re struggling to keep up with your credit card bill and don’t have the ability to switch to another card with a better rate, you can ask your provider to freeze interest and charges to help you get to grips with your debt.
When you freeze interest, it simply means interest charges are paused so you can focus on paying off your debt without worrying about rising interest costs.
Whether you’re only making your minimum repayment, or have actually fallen behind with your payments – known as being ‘in arrears’ – freezing credit card interest and charges prevents your debt growing. And it can help you clear what you owe more quickly.
Can I freeze the interest on my credit card?
You can ask your credit card company to freeze the interest on your credit card, but there is no legal obligation for it to agree.
The good news, though, is there are several voluntary codes of conduct most credit card companies have signed up to, which encourage them to help you if you are in financial difficulty. These include the Lending Standards Board’s Lending Code and the Credit Services Association’s Code of Practice.
The Financial Conduct Authority (FCA) also requires lenders to treat customers fairly, and to work with customers who may struggle to make payments.
If your provider does agree to freeze credit card interest or any other charges associated with missed payments, it will usually do so for a set period of time. This can be up to a few months or possibly even longer, depending on the circumstances – after all, the last thing the credit company wants is for you to stop making repayments altogether.
The interest you don’t pay during this period won’t get added back on to your account when your situation improves.
How to freeze interest on a credit card
The sooner you inform your credit card provider that you’re having trouble paying, the sooner it can take action to help you. Get in touch by calling customer services – the phone number is usually printed on the back of your credit card.
You will need to explain your current financial situation and you will likely be asked to send some proof by email or letter – such as a budget showing how much you can afford to repay and copies of bank statements.
At this point, it may be useful to seek debt help from a charity, which could help you work out a budget and speak to the credit card company about your repayments.
Once satisfied with the information, the credit card company may offer you a variety of options to try to help you get back on your feet, which may include freezing the interest you owe and waiving any relevant charges.
The main advantage of freezing interest is that your credit card debt won’t grow any further (as long as you don’t spend any more on the card). This means that your repayments will go towards clearing your balance rather than just chipping away at the interest, which could help you pay off your debt sooner.
The ability to reduce payments and repay your debt more quickly is almost always a good thing, so you shouldn’t wait until you’re in dire straits before you speak to your credit card company.
Will freezing my credit card interest affect my credit score?
Not if you agree to a freeze before missing a payment. Acting quickly and working out a solution with your credit card provider before you miss repayments will prevent damage to your credit score. But let bills go unpaid and your credit file will be updated and your score will deteriorate.
Debt Respite Scheme
The Debt Respite Scheme, also known as a ‘Breathing Space’ is a possibility if you live in England and Wales and are facing problem debt.
Through this scheme, you can freeze interest and charges on all qualifying debts (including credit cards) and pause any enforcement action from creditors.
Breathing Spaces can last up to 60 days (or longer if you have a Mental Health Breathing Space) to give you time to work with a debt adviser to tackle your debts.
To apply for a Breathing Space, you have to go through a debt adviser.
Scotland also offers support for those with problem debt through its Debt Arrangement Scheme, where a money adviser helps to arrange an affordable repayment plan with interest and debt charges suspended and then cancelled once you have cleared the debt.
There are currently no similar schemes available in Northern Ireland.Whether you apply for this scheme or not, if you’re struggling with credit card debt, it’s a good idea to ask for help from Citizens Advice or a debt charity such as National Debtline, StepChange or Turn2Us.
» MORE: What is a Breathing Space?
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It’s important to know the potential advantages and disadvantages of credit cards before applying for one. Even though credit cards can be useful, there are some risks to be aware of too.