Persistent debt

What you need to know about persistent debt and how you can reduce the cost of your credit.

What is persistent debt?

The Financial Conduct Authority (FCA) defines persistent debt as when you are paying more in interest, fees and charges than you are paying off your credit or store card balance, over a period of 18 months or longer.

Essentially this means, without increasing your payments, it could take several years and cost you more in interest and charges, before you’ll repay your balance.

Persistent debt mainly applies to credit or store cards because your payments can be relatively flexible.

We’ll get in touch to let you know if we think you’re in persistent debt and give you practical advice to help you move forward.

How to reduce the cost of your credit card

Paying more will help

Paying more will help

Your statements include a minimum payment amount, which you must make on time to avoid fees, losing any promotional interest rates and damaging your credit score.

It’s good to make any extra payments you can, but understand that this may not always be possible. Continuing to make just the minimum payment is an expensive way to borrow and could result in you paying more overall.

If you continue to pay more in interest, fees and charges than off your balance for 36 months, we'll get in touch and let you know how much to repay.

Why paying more makes a difference

This is a simplified example using a balance of £3,000 with an effective interest rate of 24%.

Paying the minimum costs you the most

Starting at £84 and reducing over time.

To clear your balance, it will take:

28 years and 3 months

 

Interest paid: £5,214

 

Total paid: £8,214

Paying a fixed amount costs you less

At £84 each month.

 

To clear your balance, it will take:

4 years and 10 months

 

Interest paid: £1,866

 

Total paid: £4,866

Paying a little more costs you even less

At £124 each month.

 

To clear your balance, it will take:

2 years and 9 months

 

Interest paid: £981

 

Total paid: £3,981

This example assumes that you don’t use your credit card, no additional fees or charges are incurred, and the interest rate doesn’t change. The minimum payment is calculated at 1% of the outstanding balance, plus standard interest, fees and charges.

More about minimum payments.

Payment options

Explore ways to make payments online, by phone, in branch and by post.

You may like to use our budget calculator, which could help you figure out how much more you could realistically afford to repay. You’ll need to pay at least the minimum payment shown on your statement each month.

If you are in persistent debt and are on a recommended payment plan, you can also set up this payment amount by Direct Debit, if this helps.

Payment options

If you can't repay more

If you don’t think you can pay more at the moment, please talk to us about it. We can offer practical advice and explain all the options available to you. We find that in most cases, the sooner you get in touch, the easier it is to find a way forward.

Get help with money worries

Free independent help and advice

You can also talk to independent organisations who offer support with money worries, like;

Payplan logo

PayPlan

Free, simple debt advice.

Call: 0800 280 2816

Mon-Fri 8am-8pm and Sat 9am-3pm.

PayPlan

StepChange logo

StepChange

Get expert advice and free debt management help to manage your debts.

Call: 0800 138 1111

Mon-Fri 8am-8pm and Sat 8am-4pm.

StepChange

National Debtline logo

National Debtline

Free help and advice on dealing with your debt.

Call: 0808 808 4000

Mon-Fri 9am-8pm and Sat 9.30am-1pm.

National Debtline

More help

More help

There are more organisations that can offer you free, independent help and advice for your money worries.

Get free help and advice

Learn more about managing credit

Use our guides to learn more about managing your credit card and how to stay in control of your spending, balance and repayments.

Tips for managing your credit card

Persistent debt FAQs

  • We'll write to you:

    • If you've paid more towards interest, fees and charges than on repaying your credit card balance, for a period of 18 months or more. This letter will include information and tips on repaying your balance sooner to cut your borrowing costs.
    • 9 months after that, we’ll let you know if you’re on track and are paying more off your balance than in interest, fees and charges. If not, we’ll explain what to do and what happens next.
    • If you're still paying more in interest, fees and charges than off your balance at 36 months, we'll let you know how much to repay each month.

    We may send reminders and suggestions in between, if we think it might help you.

    Any action we take is aimed at helping you to cut your borrowing costs and repay your balance more quickly.

  • If your account has been in persistent debt for three years, a recommended payment amount will start to feature on your monthly statements.

    By paying this amount each month, it’ll help you to repay your balance more quickly.

    As it will include your minimum payment, any overdue payments, and will take into account if your card is still being used, the amount can vary month to month, so make sure you keep an eye on your statements.

  • If your account has been in persistent debt for three or more years, and you are not paying the recommended monthly payment, you may lose the ability to make further transactions with your credit card. This is to help you make progress with repaying your balance.

    If you need your credit card for essential living expenses, contact us so we can find a way to help.

  • If your account is in persistent debt, it won't directly affect your credit score, but things like your repayment history and carrying high debt balances could.

    Learn more about what affects your credit score

  • If you’re worried about your money or repaying your balance, please get in touch. We’ll explain all your options and help you to find a way forward.

    Get help with money worries