- What is persistent debt?
- What are the new rules?
- How do the rules affect me?
- How do I get out of persistent debt?
- What happens if I don't increase my payments after you first get in touch?
- What does card suspension mean?
- What is a minimum payment?
- How do I increase my payments?
- What is the FCA?
You're in 'persistent debt' if a bigger chunk of what you paid back on your credit card over 18 months went to interest, fees and charges than to paying off what you borrowed.
What your payments go towards
New rules introduced by the FCA (our regulator) are expected to affect around 3 million people in the UK in this situation. They aim to protect these people from getting into difficulty with long-term borrowing.
Richard set up a Direct Debit for minimum payments when he opened his account 5 years ago.
Recently, he got an email from us saying that over the previous 18 months he'd paid more in interest, fees and charges than towards the amount he borrowed.
Richard switched from paying the minimum (£28 last month) to a fixed monthly amount of £44. He'll now pay off his balance quicker and be on the path out of persistent debt.
He'll pay £1,450 less interest*
People in persistent debt often pay the minimum or close to it.
If you're up to date with your account, it's the lowest amount you can pay to avoid late or missed payment fees. It's a percentage of your balance rather than a fixed amount, so it rises or falls with your balance.
Making low repayments for a long time means debt hangs around longer. If you can boost your payments, you'll pay back faster, costing you less in interest.
That boost will help. But if you can afford to pay any more, you'll be on track to leave persistent debt quicker.
Zahra recently received a letter from us saying that over the previous 18 months she'd paid more in interest, fees and charges than towards the amount she borrowed.
She only uses her credit card for emergencies and pays a few pounds over the minimum to help keep her clear of fees.
We upped Zahra's minimum payment so this month she'll pay £28 instead of £18. This increase will help her pay off her balance quicker and get out of persistent debt.
She'll pay £625 less interest*
Work out the time and money you could save with our Repayment Calculator
Where to go next
Boosting how much you pay each month is the way to leave persistent debt.
Continue to make low repayments and you could stay in persistent debt.
You could have your card suspended. More info