Payment holidays allow you to take a break from your repayments for a certain period – usually one to three months. As soon as that period is over, you’ll have to resume paying what you owe. By that time, not only will you pay more on interest, but your repayment period will be longer.
The term will not only be extended by the number of months you’ve missed, but your debt will be determined by how much interest and administration costs you’ve incurred as a result of the payment holiday. This is of great importance if you have long-term debt like a bond. Do you want to have debt that lingers longer than necessary?
Your credit score might also drop in the process because of the debt burden that is brought on by the deferred payments.
Another noteworthy point about payment holidays is that they’re available to good customers. If you’ve been missing payments you will not be eligible for payment holidays.
What you can do instead
Need debt counselling or consolidation?
Explore DebtBusters' solutions for reducing your interest rates and unlocking cash.
Find out moreIf you’re struggling with your debt, debt counselling is your best bet. With debt counselling, you’ll pay reduced instalments, giving you a chance to breathe while you’re trying to get back on your feet. Just make sure you apply before your creditors take action against you.
The debt counsellor will assess the level of your indebtedness, and if you’re deemed overindebted, you’ll be approved to undergo debt counselling.
How long you stay under debt counselling depends on the amount of you debt you have. Usually the process takes about three to five years – and in some isolated cases, six years. Throughout these years, you’ll pay the amount you’re comfortable with and you’ll have no creditors hounding you.
Not only that, but you’ll come out with better money management skills and the opportunity to repair an unfavourable credit score.
To find out more about how debt counselling can help you cope in tough times, contact DebtBusters on 086 999 0606 or send an email to [email protected].