What the FCA means by persistent debt
If your repayments have been going more towards paying interest, fees and charges than off your balance for 18 months or more, the FCA calls this persistent debt. As part of the rules, we'll get in touch to explain what your credit card is costing you and what you should do next.
Paying more than the minimum each month reduces the interest you'll pay
Your minimum payment is worked out using a % of your balance plus interest, fees and charges. This will then slowly reduce over time as your balance is paid off - provided that you haven’t made any further purchases, transfers, cash advances or incurred any fees or charges.
If you can afford to, fix your repayments to more than the minimum or make extra payments now and then to make sure your account gets out of persistent debt. Paying more than the minimum every month can make a big difference – you’ll pay off your balance quicker and save on interest. It could also improve your credit score.
This example shows the difference between only paying the minimum % each month and fixing your payment at the same amount each month:
The figures are based on a £3,000 balance and assume you don’t continue to use your card for purchases, transfers or cash advances, incur fees or charges and that the 24% effective rate per annum doesn't change. The minimum payment has been worked out using 1% of the £3,000 balance plus interest, fees and charges.