Persistent debt

What is persistent debt?

Persistent debt is when you pay more in interest, fees and charges on your credit card, than you have repaid of the amount you have borrowed for a sustained period. It's an expensive way to borrow money and will take you longer to repay your debt.

For example

Here’s how, by changing payment behaviour, one member was able to pay off her debt quickly and more cheaply…

Zoe's credit card balance is £3,000 and her interest rate is 17.9%. Her minimum payment this month is £71.45, with only £30 of it actually reducing her balance, and the remaining £41.45 covering the interest. This means she's paying more in interest and charges than repaying her balance.

If Zoe were to increase her monthly payment to £100, she’d pay £58.55 off her balance and £41.45 in interest. If she continued paying the £100 each month, she’d pay £2,325 less in interest, and clear her debt 10 years and 8 months quicker than if she only made the minimum repayment each month.

How we contact you about persistent debt

If you're in persistent debt, we want to help. We will write to you to let you know and describe the steps you can take to get out of persistent debt, including how to reduce the interest, fees and charges you would otherwise incur. We will:

  1. Contact you once you have been in persistent debt for 18 months to let you know that you are in it.
  2. Provide you with a voluntary payment amount (by monthly letter or email) which, if paid, will take you out of persistent debt.
  3. Review your account at 27 months and write to you informing you whether you've moved out of persistent debt or if you're still in it.
  4. Review your account again at 36 months. If you're still in persistent debt at this point, we will provide you with options to support you in paying off your balance sooner.
  5. If you do not contact us to arrange to move on to one of these options within 3 months, we will suspend your card to prevent you from further adding to your balance and it may cost you more and take you longer to pay off your debt.

How to get out of persistent debt

To get out of persistent debt you need to pay more off your balance each month than you pay in interest, fees and charges. There’s more than one way to do this and the best way for you will depend on your situation.

1. Make additional payments

You can make a payment to your credit card at any time. So, if you find yourself with a little cash to spare, why not use it to reduce your credit card balance? Additional payments will help you move out of persistent debt and bring down your balance faster. For details on how to make additional payments, please see the “How to make payments to your card” section below.

2. You may wish to consider using your savings to bring down your balance

If you have savings, you could use some of that money to reduce your credit card balance. You’ll be paying more in interest on your outstanding balance than you’ll be earning on your savings. So, bringing down your balance will save you money in the long run. Please make sure to check that there aren't any charges or impacts to your interest rate before you do.

3. Pay a fixed amount each month instead of the minimum payment

If you don't plan to spend any more on your card, think about changing to a fixed payment. It doesn't have to make a big difference to your monthly outgoings and could save you a lot.

For a card with a balance of £3,000 and a rate of 17.9% If you make your minimum payment If you make a fixed payment If you make a bigger fixed payment
Monthly payment Starts at £72, and reduces each month as the balance decreases Fixed at £72 every month £100
Time to pay off your balance 14 years and 1 month 5 years and 3 months 3 years and 4 months
How much you’ll pay in interest £3,227 £1,499 £901
How much money you’ll save n/a £1,728 £2,326

To work out the right numbers for your card, try (This link will open in a new window). It's a free calculator which can help you work out how much to pay. You'll need to know your card's minimum payment rules to use it.

It's best to pay off as much as you can afford. If you'd like some help budgeting, try our budget calculator. We're also happy to help over the phone or in branch (This link will open in a new window).

How to make payments to your card

If you bank with us, it’s easy to make a payment to your credit card in our Banking app or Internet Bank. All you need to do is select your current account and make a transfer to your credit card.

If you bank with another provider, you'll need these details to make a transfer:

  • Sort code: 073012
  • Account number: 00001604, and
  • The 16-digit number on the front of your credit card (to use as your reference)

If you pay by direct debit you can increase your payment in the Internet Bank (This link will open in a new window), or by giving us a call. You can call us to set up a new direct debit, too.

What happens if you stay in persistent debt

The Financial Conduct Authority (FCA) has introduced new rules to help people in persistent debt. As a responsible lender, we will contact you to inform you that you are in persistent debt and will provide options to help you get out of it.

If you are still in persistent debt after 36 months, we will provide options to help you repay your debt faster, such as moving on to a 48-month paydown plan.

If you do not contact us to arrange one of the repayment options, we will have to suspend your card to prevent you from further adding to your debt.

When you have moved out of persistent debt, we’ll write to you confirming this. We’ll also provide you with tips on how to prevent slipping back into persistent debt.

What to do if you're worried about persistent debt

We understand that it's not always easy to just pay a bit more. If you have any concerns then please get in touch with us:

0345 600 66 11 (8am to 8pm Monday to Saturday, and 9am to 5pm Sundays).
If you phone out of hours, you’ll go through to our automated helpline.

If you'd prefer some advice from an independent organisation, try these free services: