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.

The downside is that debt can build up faster than it can be repaid. 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 paying more in interest, fees and charges on your credit card than you have towards what you have borrowed for at least 18 months.

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

Your minimum payment 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. 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 you will be charged.

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.

You can find the APR that relates to your credit card account within your Terms and Conditions:

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 1st minimum monthly repayment in this example would be £120. The minimum monthly repayment reduces as the balance reduces. The actual time taken to pay and total amount paid may vary.

If you’d like to an example which is more reflective of your card balance, you can use Money Helper’s tool to get personalised information.

Money Helper Credit Card Calculator External link icon

What will happen if I am in persistent debt?

First Letter

If we see you’ve been in persistent debt for 18 months, we’ll write to you to let you know. We’ll explain what we can do to help and encourage you to discuss your financial circumstances with us.

9 months later

Following this, if we see your situation hasn’t changed and you’re still paying more in interest, fees and charges than towards your balance, we’ll contact you again to offer our support.

18 months later

Lastly, if we see you’ve been in persistent debt over a three year period, we’ll let you know your options for repaying the outstanding balance over a reasonable period of time. If you don’t engage with us at this point, we may need to block your card.


How do I avoid persistent debt?

If you can afford to, you should pay more than the minimum repayment or a low repayment on your credit card each month. If you’d like to call us on 0800 633 5783, we can tell you if your current repayments are enough or if you’d need to increase them to avoid getting into persistent debt.

For free, independent advice, you can also visit the Money Helper website. They provide further information on what persistent debt means, tools which can provide you with tailored examples to help you address or prevent persistent debt and additional resources to help you to take control of your finances:

Money Helper - Help if you’ve been contacted about your credit card and persistent debt

If you have money worries

We are here to help. If you find that you need additional support, please contact us as early as possible and remain in touch to give us the best opportunity to help you. We operate a dedicated phone line for customers with money worries: 0800 633 5783 (or +4428 90049561 from outside the UK).

If you’re not sure what to do, or need help to sort out any money worries that you may have, you can also get free, independent advice from:

You can find more information about these and other services on our customers in financial difficulty page.

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