When taking a payment holiday could prove costly!
As the net continues to tighten for many of the UK population and financial worries come to the surface a number of credit card and loan company customers have been attempting to instigate "payment holidays". While the banks are not necessarily appreciative of such requests at the moment there have been instances of customers being successful and giving themselves more breathing space to sort out their financial worries.
However, taking a payment holiday can often lead to disaster with customers expected to pay back the original debt, with interest payments which have been missed added to the overall figure, meaning interest is paid on interest as well as the initial capital. If you take a "payment holiday" for a significant length of time this factor can literally make matters worse.
It is very simple to fall into the trap of taking a short-term view on loans and credit card payments while often missing the longer term picture. The quicker you pay off your loan and credit card interest the faster you will be out of debt and ensure the initial capital and interest does not get out-of-control. While HSBC has received some criticism because of a recent letter suggesting mortgage customers should look to "over pay" their monthly payments, there is some credence to this idea. However, it is vital that professional advice is taken before any financial agreements are amended or renegotiated.
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