Credit cards offer customers flexibility to manage their finances and repayments.
But there's a risk customers can build up and hold debt over a long period of time,
without making much headway on the outstanding balance.
The Financial Conduct Authority (FCA) has introduced new rules to help millions
of people get out of expensive, longer-term credit card debt, otherwise called persistent debt.
They're the result of an FCA credit card market study, which analysed 34 million credit card customers'
accounts over five years and surveyed 40,000 consumers. It helped them build a comprehensive picture of
real credit card use in the UK.
They found that making low repayments on credit cards for a long time can be very expensive
and sometimes masks underlying financial difficulty. Under the new rules, at certain points
in time, we have to prompt customers to make faster repayments or propose repayment plans to
help them repay their debt more quickly.
This begins after 18 months of persistent debt, when a customer has paid more in interest,
fees and charges than they've paid towards the amount they borrowed over an 18-month period.