Need help reading this page? Click to activate Recite Me popup.

Persistent debt

We can help you understand persistent debt and what you can do to reduce the cost of your credit.

 

We’ll tell you:

  • what persistent debit is
  • how to work out whether you are in persistent debt
  • how to get help if you need it.

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.

If you don't increase your payments, it might take several years to repay the balance. This could cost you more in interest and fees.

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

How to save money on your credit card debt

The repayment calculator will help you see how long it'll take to repay your credit card balance. It works out the amount you should pay each month.

It will show you how much you could save in interest charges if you pay slightly more each month.

To get started, you’ll need:

  • the balance on your credit card account
  • the interest rate being charged
  • how much you can afford to pay each month.

The calculator works out the total interest you need to pay. It shows the total cost of credit to repay. You can also see how long it’ll take to pay off the remaining balance.

Repayment calculator

Check how your monthly payments affect the time needed to pay off your balance. You can also see how to reduce your interest costs.

£
£

Results

Total interest paid = ##interest##

Total paid = ##total_paid##

Period of time = ##years## year(s) and ##months## months

 

Good to know

The more money you pay each month, the less you’ll pay in interest and charges and the quicker you’ll pay off your balance.

How paying more will help reduce the cost of your credit

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. 

If you pay more in interest, fees and charges than on your balance for 36 months, we'll help you. We'll explore different ways to help you clear your balance. This may include stopping your card or lowering your credit limit.

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

Paying the minimum costs you the most

Starting at £84 and reducing over time.

You’ll repay your balance in:

28 years and 3 months

Interest paid: £5,214

Total paid: £8,214

Paying a fixed amount costs you less

At £84 each month.

You’ll repay your balance in:

4 years and 10 months

Interest paid: £1,866

Total paid: £4,866

Paying a little more costs you the least

At £124 each month.

You’ll repay your balance in:

2 years and 9 months

Interest paid: £981

Total paid: £3,981

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

How to avoid getting into persistent debt

Setting up a direct debit will make sure your payments are made on time. You can select from a minimum payment, a fixed amount or a full payment direct debit.

By paying more than the minimum amount, you’ll reduce your balance quicker and avoid being in persistent debt.

How we can help

We are committed to helping you to pay off your credit card balance in a reasonable time frame.

If we think you are in persistent debt, we will:

  • get in touch and offer you practical advice to help
  • give regular updates to help you track your progress
  • put you in touch with our specially trained colleagues, who can help with any questions
  • design a plan with you, based on the amount you can afford to pay each month
  • help set up a direct debit.

Recommended payment amount

If you've been in persistent debt for over three years, consider setting up a direct debit. This should be for a recommended payment amount. We suggest paying more than the minimum needed. Doing this will help you reduce your balance faster and avoid extra interest charges.

You can easily set up a direct debit for the recommended payment amount using online banking or the mobile banking app. Just select the three dots in the top corner of your credit card account. Then select 'Manage direct debit.'

We'll share the recommended payment amount with you in a monthly SMS. You can make this payment in other ways, if you don’t want to pay by direct debit.

Set up a direct debit

By setting up a direct debit, you can be sure that your payments are reducing your debt.

Set up a direct debit

Get set up online

Let’s take a closer look

  • We'll write to you if you have paid more interest, fees and charges than you’ve paid off the balance, over 18 months or longer.

    This letter will include information and tips on repaying your balance sooner to cut your borrowing costs.

    If we have your mobile number and believe it’s affordable for you, we’ll send you a text message each month. This message will suggest a payment amount. You can select to repay this amount to help you get out of persistent debt.

    In another nine months, we'll check in with you. We'll update you on how things are going. We'll let you know if you're paying off more of your balance than of your interest, fees and charges.

    18 months after your first persistent debt letter, we'll check your account again. If you're still in persistent debt, we'll inform you.

    We'll give you a recommend payment amount for you to repay each month. This way, you can clear your balance in about four years. You'll also pay less interest during this time.

    Your monthly statements will show this recommended payment amount. This amount can change each month. It will include your minimum payment, any overdue payments and any transactions you make if you still use your card.

    During these four years, we’ll write to you every year, to let you know how you are progressing on your persistent debt journey.

    We might send you extra reminders and suggestions with these letters. If we have your mobile number, you'll also receive a monthly text message. This message will tell you how much you need to pay each month to avoid ongoing debt within four years.

    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 18 months, a suggested payment amount will show on your monthly statements. This is the amount you can choose to repay to help get you out of persistent debt.

    If you have been in persistent debt for 3 years and do not pay the suggested payment amount each month, a recommended payment amount will then feature on your monthly statements instead.

    This recommended payment amount is the amount you can choose to repay to help you get out of persistent debt by the end of your 4-year paydown plan. 

    The recommended payment will include your minimum payment, any overdue payments, and will consider if you still use the card.

    Both the suggested payment amount and the recommended payment amount can vary each month. By paying this amount monthly, you will repay your balance more quickly.

  • If your account has been in persistent debt for three years or more, we may stop your card. This will happen if you miss the recommended monthly payments. But don’t worry, we're here to help you pay off your balance and make progress.

    If we stop your card, we’ll close your account after you've cleared 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.

    To help you manage your debt, we may lower the total amount you can spend. This change will prevent your balance from getting too high. It could also affect your credit score indirectly.

    Things like your repayment history and carrying high debt balances could also affect your credit score.

    Learn more about what affects your credit score.

  • If you are worried about your money, we have help and support on our money worries page.

You might also like

The 50 30 20 rule

Helping the way you think about and manage your spending.

50 30 20 The 50 30 20 rule.

Managing your bills

Simple advice to help you keep on top of your bills.

Managing your bills Managing your bills.

Spending insights

Find out where your money goes with the spending insights tool.

Spending insights Spending insights.

Managing your money

With the rising cost of living, we have the tips and tools to help you manage your money. Whether you are budgeting, borrowing, saving or supporting others we're here to help.

Help manage my money

Managing your money

With the rising cost of living, we have the tips and tools to help you manage your money. Whether you are budgeting, borrowing, saving or supporting others we're here to help.

Help manage my money