If you struggle with mounting debt or find it difficult to meet monthly repayments, you might wonder if you can freeze interest and charges.
It’s one thing having to repay your loan; however, additional interest rates and hidden fees can make it even harder.
Some creditors may allow their lenders to freeze any interest rates for a set amount of time to help them recover financially.
It is important to try and repay your debts if you fail to do so; you might have to deal with debt collectors.
Our article will explore how you might ask your creditors to freeze your interest rates and what you can do if your creditors refuse.
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How to freeze interest on credit cards UK?
If struggling with credit card debts in the UK, you can contact your creditors to freeze interest and charges.
Freezing your interest charges on credit cards can help you clear your unsecured debts and get back on track quicker.
Credit card providers can agree to freeze interest for some time to try and help your current financial situation.
However, not every creditor will agree to freeze interest rates, depending on the lender and your unique financial circumstances.
Does a creditor have to stop interest and charges?
No, a creditor does not legally have to stop interest and charges at any point.
However, many financial codes of conduct will encourage lenders to stop, or reduce, interest rates and additional charges if you are struggling with payments.
If a customer pays more in interest than their actual debt, this is called persistent debt.
Persistent debt can be difficult to break free from, so it is very beneficial to get interest rates frozen.
Are interest and charges regulated?
Most credit providers in the United Kingdom are signed up to either the Lending Standards Board Lending Code or the Credit Services Association Code of Practice.
Credit companies in the UK are also regulated by the Financial Conduct Authority (FCA), which ensures all individuals experiencing financial difficulty are treated fairly by their creditors.
As these codes of conduct urge creditors to support debtors who cannot meet their monthly payments, it is unlikely that your lenders will continue to increase interest.
If you fall behind on your monthly instalments, your creditors will likely enlist debt collectors’ help to reclaim the outstanding balance. When debt collectors get involved, interest and charges tend to be halted.
You must speak with your lenders as soon as you realise you will struggle to make your payment plan instalments, as they will then consider dropping your interest.
Are the interest and charges added to my debt legal?
Interest and charges can only be added to your debt repayments if listed in the original credit agreement.
However, there may be times that can be classed as unethical for a credit card company to increase your interest rates. These include:
- Increasing interest charges due to late or missed payments.
- Increasing interest fees with the knowledge that you are in growing financial difficulty adds to the debt you are struggling to repay.
- Adding fees for actions that haven’t been taken by the debtor, such as legal charges, when no legal action has been taken.
- Charging extortionate and over-reaching costs, for example, charging £200 for sending a notice. This would be unjust as it wouldn’t cost the creditor close to that amount to send a letter.
If you feel like additional interest has been incurred for any of the above-stated reasons, then you may be eligible for compensation should you file a valid complaint.
How can I make a complaint about unfair interest rates?
You can make a complaint to your creditors via the following steps:
- First, send an Income and Expenditure sheet to your creditors, demonstrating how you are having financial difficulties.
- If your lender continues to add interest, you should send them a complaint. You can find template complaint letters from various debt charity resources online.
- If you are still being forced to pay interest or your creditor has ignored your complaint, you can escalate your complaint to the Financial Ombudsman Service.
The FOS works in the interest of the individual in debt, so make sure to take your complaint to them if nothing else has worked. It is their job to make sure credit card companies treat customers fairly and make any increases in debt fair.
Increasing interest can make repaying debt extremely difficult. Always seek debt help from a debt adviser when you realise you can no longer afford your payment plan.
How to freeze interest on catalogue debts UK?
There are various ways to stop your catalogue debt interest rates from growing. You can find the best ways to get debt help below:
Seek debt help
First things first, contact a debt help charity or a money advice service. Debt charities can help you in the following ways:
- Help you negotiate a new and affordable repayment plan.
- Contact the credit card company on your behalf.
- Provide templates for interest letters.
- Suggest alternative debt solutions, such as a debt management plan or individual voluntary arrangements.
- Assess your finances for you by evaluating your financial statement and credit rating.
Debt charities offer free service and confidential advice to those struggling with financial hardship.
Never pay for a debt advice service! Debt charities are here to help you get out of debts, such as persistent debt, not push you further into your money struggles.
You can find the contact details of many popular debt charities in our informative article. Including the details for the national debt line that can provide free debt advice.
Individual voluntary arrangements
Certain debt solutions, such as IVAs, will halt any interest and charges, or significantly reduce payments.
An IVA is a formal agreement in which you can make monthly payments in achievable instalments over four to five years.
If you have a serious debt problem, an IVA procedure can be a great solution as, not only does it include freezing credit card interest, but it also allows you to make one singular payment towards multiple debts.
An IVA can help you pay off all your debts and can even help you work your way out of persistent debt, as all this interest is frozen.
Debt Relief Order
A debt relief order allows you to have all your debts written off, provided your personal debts are fairly low, and you have some assets.
A debt relief order can include many kinds of debt, including payday loans, any personal loan debts, and other debts that are impacting your credit report.
A DRO is a debt solution that freezes your debt repayments and interest for 12 months.
Freezing interest and credit card repayments for this long can make a huge difference, allowing you to get to a better financial situation and out of your problem debt.
Removing interest from payments to your credit card company can help you get out of persistent debt. So, don’t be afraid to seek solutions that will help you become debt-free.
To find the best debt relief companies available in the UK, read our article!
Debt management plans
Other debt solutions you could consider to help pay off your priority debts to become debt-free include a debt management plan.
A debt management plan doesn’t necessarily mean interest on your credit card debt is instantly disqualified.
However, within a DMP debt solution, the debt management company can ask the credit card companies whether they would consider letting you freeze credit card interest.
Having a debt charity make requests to a credit card company on your behalf can be beneficial, as they have experience dealing with all your creditors.
Even if you cannot get the credit card company to freeze your interest, lower payments on a repayment plan can help you plan achievable payment instalments, which aid you in reducing your total debt.
Final Thoughts
You may be wondering how to freeze interest on debts, and hopefully, this article has answered your queries.
You can ask your credit card company to freeze interest and charges by sending them a formal letter, including bank statements demonstrating your income and expenditure.
If your credit card company refuses, then further action can be taken to freeze interest on your behalf.
Seek debt advice from a debt charity, take out an IVA agreement where you make the minimum payment, or consider a debt management plan.
You can get free advice from a money advice service. Debt charities can also help you discuss any debt problems with your credit card provider or help you find a suitable debt solution.
Further interest on top of all your debts can be difficult to pay back and you could end up in persistent debt.
For persistent debt advice, read our informative article today!
Other Debt Solutions
Here are the best debt solutions if you are struggling with credit card debts.
