Previous amendments allowed the moratorium to start to cover more beneficiaries and types of credit, which translated into a very significant relief for the family budget. The oxygen balloon is now applicable to all mortgage credits, including subsidized loans, as well as consumer credit, but only in cases where the financing is for the purpose of education or training expenses. Despite this greater scope and considering the high number of families that contracted consumer credit, the fact that the moratorium does not fully include it continues to limit the effectiveness of its objective: to help families in difficulty.
For situations not covered, the private moratoriums presented by the Portuguese Banking Association (APB) and the Association of Specialized Credit Institutions (ASFAC) remain, which include consumer credit (up to € 75,000) and even credit cards, in some cases. The latter, however, will cease to be an alternative very soon, as they will end on September 30 this year, although some associated institutions have extended the deadline until the end of 2020. In the case of APB, the moratoriums will remain until March 31, for mortgage credit, and until June 30, for consumer credit.
I don’t pay now, but pay later?
Although already in its initial wording it states that the moratorium will not represent an increase in costs for the consumer, the legislative document that governs this mechanism means that the request for suspension of benefits is not completely free. Banks record interest accrued during the credit suspension period and add it to the outstanding capital. In practice, although up to 18 months without receiving the repayments of the credits granted, at the end of the process, the banks will obtain an extra gain, which will end up being higher than what would exist, if the capital shortage were the only installment cause. This last option is possible, either in the public moratorium or in those defined by banks. However, it means that the consumer will have to bear the interest during the suspension period.
Although the various legislative changes have clarified the application of the moratorium and increased its scope, they have not changed this aspect that we continue to demand: the suspension of the total payment of benefits, with the postponement of its term, without additional costs for the consumer. .
Who is covered by the moratorium?
The most recent legislative changes have made the criterion relating to the absence of tax or social contribution debts more flexible. Therefore, companies, sole proprietors, private social solidarity institutions (IPSS) and families affected by the current economic situation can benefit from the moratorium, even though they owe the State and Social Security debts. These cannot, however, exceed 5000 euros. Taxpayers with debts of a higher value will only be eligible if they are in the negotiation process of regularization or if they make the request for regularization until September 30th.
Previously, in line with what already existed in private moratoriums, reductions of at least 20% in household income came to be considered for access to support. Emigrants also started to be covered, as well as the entire household. In addition, anyone with one of the following conditions can access the moratorium:
• find themselves in a situation of isolation or assistance to the family;
• have suffered a reduction in the normal working period or the employment contract has been suspended;
• being unemployed or a self-employed person eligible for extraordinary support to reduce economic activity;
• be a worker in companies closed following the proclamation of a state of emergency;
• have suffered a temporary drop of at least 20% in the overall household income due to the pandemic.
The registration process can be carried out remotely, using an online form, made available by each banking institution on its website. In addition to personal information, it is necessary to request proof of the contributory situation with the State and Social Security, in cases where it is payable to the beneficiary.
The various changes introduced by the Government have brought the public moratorium closer to those that were already being made available by APB and ASFAC, despite continuing to leave out almost all consumer credit.
The deadline for joining remains, for now, 30 September 2020. The suspension of benefits will be in effect until 30 September 2021.
In the difficult times ahead, it is important to carefully manage the family budget. The moratorium represents a temporary relief for the families most affected by the crisis, but it is necessary to prepare for the future. If the reduction in family budgets remains after this exceptional period, the effort rate must be assessed and, if necessary, it must resort to the renegotiation of credits, before entering into default. Despite the offers from the banks, who wave personal credits a few clicks away, and the Banco de Portugal has eased the requirements for their concession, the use of a new credit must be a considered decision, so as not to aggravate the financial situation .
Consumers should be exempt from bank charges
The exemption of some bank fees, introduced to facilitate the management of family budgets at this time of crisis, ended on 30 June. We disagree with the reintroduction of these charges, especially with regard to online transactions, which reduce the need to travel to branches or ATMs.
The same applies to MB Way, the mobile payments application that allows, among other operations, to make payments and instant transfers. Despite the limitations on commissions recently approved by Parliament, the measure will not take effect until next year. Until then, customers of most banks will continue to pay commissions for transfers.
According to data from SIBS, physical purchases with MB Way, contactless system and QR Code have increased since the first cases of covid-19 were reported in Portugal, precisely because they are solutions that allow payments to be made without direct contact with payment terminals. Its use should therefore be encouraged.
In order to reduce cash payments, the maximum amount allowed for contactless card transactions has been definitively increased from 20 to 50 euros.