Persistent Debt

Credit cards can help you spread the cost of payment over a number of months. They’re also a useful ‘safety net’ for emergencies like job loss or unexpected expenses.

However, there is sometimes a downside in that debt can build up faster than you can repay it. If you can’t make significant contributions towards your outstanding balance, it can be an expensive way to borrow money in the longer term.

We want to identify our customers who we think are at risk of financial difficulty, and offer them help to repay their debt more quickly.

What is Persistent Debt?

Persistent debt is defined by the Financial Conduct Authority as when, over an 18 month period, you’ve paid more in interest, fees and charges on your credit card than you have towards your outstanding balance.

How do you get into persistent debt and what does this mean?

Your minimum payment* is made up of interest, fees and charges plus a percentage of your outstanding balance. If you make the minimum repayment or a low repayment on your credit card each month, it will take you much longer to pay it back and cost you more in interest. It also puts you at risk of falling into persistent debt.

Benefits of Paying More

It is better for you if you are able to pay more than the minimum repayment on your credit card each month. The more you can pay, the less interest it will cost you.

We have provided an example of how paying a fixed sum each month can save you more over time. This is based on a credit balance of £4000 with an interest rate of 22.9% APR. It assumes no further spending on the card and we receive minimum payments on time.

Regular Monthly Payment You will pay off the outstanding balance in around You will end up paying estimated total interest costs of
Minimum monthly repayment 24 years £5120
£120 4 years £2020 (meaning you will save £3100 in interest)
£150 3years £1415 (meaning you will save £3705 in interest)

The table above is only a guide which assumes a balance of £4000, an interest rate of 22.9% APR and no further transactions. The actual time taken to pay and total amount paid may vary.


* Your minimum payment is calculated at 3% of your current balance on your statement, or the total of interest and default charges shown on your statement plus 1% of the current balance (less interest and default charges), or £5, whichever is the greater.