With continued uncertainty on COVID-19, the U.K.’s Financial Consumer Authority announced an update in response to climbing COVID-19 patients. U.S. Citizens may need to wait for election results before seeing relief. Yahoo News reports:
- UK regulator extends loan and credit card payment holidays ahead of COVID-19 lockdown
- UK regulator Financial Conduct Authority (FCA) has announced that it will extend payment holidays on personal loans, credit cards, motor finance, and pawnbroking to support further borrowers hit by the coronavirus pandemic.
- Those who have not yet had a payment deferral under its July guidance can request one that lasts for up to six months, it said in a statement.
- Meanwhile, borrowers who have already had one deferral will be able to apply for a second.
But, the suggestion to not contact creditors implies call centers are already experiencing call volume angst.
- “In the meantime, consumer credit customers should not contact their lender just yet. Lenders will provide information soon on what this means for their customers and how to apply for this support if our proposals are confirmed.”
- The update comes on the back of the latest government restrictions regarding rising infections across the country.
Meanwhile, in the United States, some reporting lags. For example, the Federal Reserve Report to Congress on the Profitability of Credit Cards, “An annual report by the Board of Governors of the Federal Reserve System, submitted to the Congress according to section 8 of the Fair Credit and Charge Card Disclosure Act of 1988,” which has been published between July and August since 1997 has not been reported for 2020 yet. This report’s absence indicates a shift at the U.S. Federal Reserve, or perhaps an implication of reduced credit card profitability.
The Fed’s latest macroeconomic numbers indicate a slow, steady rise in the consumer price index (CPI) and a September 2020 unemployment rate at 7.9%, substantially better than April 2020’s dismal 14.7% rate.
Challenges in the U.S. credit card market continue; the last reported metric for credit card delinquency was on August 25, 2020, for Q2 2020, where delinquency volumes fell to 2.42%, from Q1 in 2020. The improvement was likely due to payment deferments. Expect Q3 reporting around Thanksgiving. By then, the election results will probably be the next indicator of where the U.S. credit card market may go. Until then, watch out for the next wave here in the U.S.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group