Consumers in Australia have gotten the deal of credit card repayment holidays from their credit card providers. Australian banks have been offering the reprieve on credit card repayments to their clients since the start of the second quarter of 2020. These financial institutions have considered their customers experiencing financial dilemmas, including grappling to pay their credit card debts, because of the ongoing coronavirus crisis. On the first quarter of 2020, the Australian Bureau of Statistics analysed pieces of information that indicated that one million Australian workers had lost their means of livelihood.
This dismal scenario began in March when the Federal Government introduced social distancing measures to curb the spread of the coronavirus or COVID-19. Scott Morrison confirmed the statistical figures. He cited that approximately one million people in the country were receiving JobSeeker payment. Also, the Prime Minister of Australia said that over five million workers were getting the JobKeeper financial assistance to remain in jobs. With these unemployment numbers, the people are performing everything they can to survive. One of the primary methods they utilise to see them and their families through the pandemic is relying on their credit cards.
Coronavirus Crisis Impacting Australian Credit Cardholders
The coronavirus lockdowns that started during the first quarter of 2020 have resulted in business establishments shutting down. Millions of Australians subsequently lost their employment as their employers closed their doors temporarily in adherence to the government’s social distancing rules. The enterprise closures have led to significant losses of jobs in various industries. These sectors comprise recreation, retail, arts, hospitality, personal services, and transportation, among plenty of others. After over a month of lockdown and a downturn in plenty of Australian households’ financial situations, credit cardholders in the country have relied on the government’s financial aid. Besides, they have been waiting to return to their jobs and for their income to come back to normal. These consumers have depended on their credit cards to pay for essential expenses, such as bills and food.
Andrew Fleming affirmed that plenty of citizens had witnessed their salaries get slashed lately. Also, he said that these people had received the official medical advice of the Government of Australia, which recommends using credit cards instead of cash in settling their bills. The chief executive officer of Financial Mindfulness, which delivers the application designed to eliminate financial stress, confirmed that the government’s advice had driven the surge in the use of store and credit cards. Fleming shared that, for every adult Australian, there is nearly one credit card. Moreover, he cited that, in January 2020, just before the coronavirus epidemic became a global threat, credit cardholders in the country had $42.6 billion owed on credit cards. The head of Financial Mindfulness added that $28.4 billion of this amount is accruing interest. Fleming warned that, as plenty of unemployed consumers have falling incomes and cover their everyday expenses with their store and personal credit cards until restrictions get lifted, they may find themselves in profound financial disaster later on.
Credit Card Providers Offering Repayment Holidays as Lifeline
The coronavirus crisis has brought tremendous financial distress to most Australian consumers. With this grim situation in mind, some of the major financial firms have come to the rescue of their deeply indebted credit cardholders. These banks’ help comes in the form of credit card repayment holidays, which aim to aid their customers who have been struggling to pay off their personal and credit card debts.
A credit card repayment holiday is an agreement between the bank or credit card provider and the credit cardholder. This arrangement permits customers to defer their repayments over a set period, typically over three to six months. Furthermore, the repayment holiday offers credit cardholders the time to get back on their feet as they utilise their hard-earned money towards the essential expenditures, instead of on their credit card repayments. Some of the Australian lenders that have implemented the temporary solution to assist their credit cardholders in financial misery due to the coronavirus crisis are:
1. HSBC Bank Australia
Credit cardholders of HSBC Bank Australia can apply for credit card repayment deferral for up to six months. These consumers have had their financial conditions affected severely by the coronavirus pandemic. The lender confirmed that their clients qualified in the credit card repayment holiday are those whose household income got reduced, the unemployed, and those who got stood down at work. HSBC Bank Australia’s credit cardholders who get approved for the repayment postponement will see zero interest applied over their deferral time. Then, following the conclusion of the repayment holiday, these customers of the bank can anticipate making at least their minimum monthly repayments. Interest will also accrue as usual then.
2. ING Bank Australia
This banking institution understands that the COVID-19 crisis has led plenty of their clients to struggle from financial difficulties. Hence, as a form of financial assistance, ING Bank Australia is offering its credit cardholders the chance to postpone their repayments for three months. Furthermore, these customers have the possibility of getting their repayments pause extended to a total of six months, as per the bank. Thus, during the period of credit card repayment holiday, customers do not have to settle their credit card dues. Nevertheless, ING Bank Australia cited that their clients can pay towards their balances if they opt to do so.
3. Macquarie Bank
This banking institution is offering its business and personal banking clients the choice to postpone their loan repayments immediately. For six months, Macquarie Bank’s customers grappling with financial difficulties due to the COVID-19 pandemic can enjoy repayment deferrals. Aside from the repayment holiday on credit cards, the bank’s assistance also applies to their customers holding home loans, overdrafts, medium and small business loans, and car loans. Then, Macquarie Bank will check in at three months to determine if circumstances have gotten some modification already.
4. Westpac Banking Corporation
Clients of Westpac Banking Corporation who suffered the loss of income or have lost their employment can enjoy the three-month credit card support package of the lender. Since mid-April 2020, the leading Australian bank has permitted credit card repayments to get paused for their eligible credit cardholders grappling from the COVID-19 crisis. The repayment holiday involves new credit card purchases, cash advances, or any existing transactions using the credit card accruing zero interest for three statement cycles. After the three-month credit card repayment holiday, the repayments of the bank’s clients will get back to normal, and the interest will get charged like before.
Credit cardholders can, indeed, get some financial stress off of their minds with the banks’ temporary solution of credit card repayment holidays. It is because they do not have to worry about late charges for missing a repayment and the obligation to make minimum monthly repayments. The short-term aid from the lenders allows the consumers to focus their income on paying for essentials as well. However, they should coordinate with their lenders during the repayment postponement period for further assistance. In this manner, they can prevent their balances from accruing charges and interest. Also, they can avoid possibly owing more on their credit cards when the pause period concludes. Therefore, they can achieve a better financial position despite the coronavirus crisis.