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Debt Me Outta Here

Have you received a letter recently telling you that you have ‘persistent debt’? This can be especially alarming if you don’t think that you’re in debt. If you’re like us and haven’t heard of the term before, ‘persistent debt’ refers to when you are paying more interest and charges on your credit card than you’ve repaid on the amount borrowed, calculated based on your activity over the last 18 months.

What’s more, having persistent debt can make it more likely that you’ll get into difficulty with debt in the future as minimum payments tend to only cover interest and charges on the debt, or only chip away a very small amount of the balance (StepChange).

So, now’s the best time to get on top of those monthly repayments and really calculate your debt priorities and action plan; this month StepChange Debt Charity are raising awareness about ‘persistent debt’ and how to manage minimum payments, alongside raising awareness of the new FCA regulation rollout around persistent debt into catalogues and store cards.

FCA regulations

New FCA regulations state that your credit card provider must tell you if you fall under the definition of ‘persistent debt’ and also have to ask you if you can repay more each month, explain other repayment options and warn you of the consequences of continuing low repayments. This is set out to protect you from potential future debt, rather than forcing you to pay money you can’t afford.

Carrying on making the minimum payments toward your card won’t cause your account to default, but lenders are now required to contact you regularly and suggest actions to increase payments. In the case they feel they need to up monthly minimum repayments, you’ll be fully notified before these changes come into place.

How can I get my card out of persistent debt?

Speak to your credit card provider

Firstly, establish the entirety of your debt; how much do you owe and what are the interest rates? Write it all own and face up to the reality of how much you have (Mrs Mummy Penny). Once you’ve got all this information, you can start establishing what you should pay off first (usually the bad debt with the highest interest rate).

Your provider may also be willing to suspend interest and charges for a while or offer you a better deal if you’re thinking of moving to another bank.

Stop spending on the card and increase your monthly payments

If you’re constantly fighting to reduce your debt, you don’t want to see your balance soar up due to extra sending. Mrs Mummy Penny recommends getting rid of the cards completely (recording the important information, card numbers and contact numbers first). Try cutting them up or if you can’t quite face that, freeze them in a block of ice.

Plan out exactly how much you can afford to pay off each month of each card and make this your minimum repayment; anything additional you can put towards them each month is a bonus.

Are you in control of your repayments? StepChange have just launched their 60 second repayment checker to get a clearer picture of whether you’re on top of your credit card, store card and catalogue repayments.

Where can I get support?

  • On top of their usual debt service, StepChange have got a dedicated team available Monday to Friday 9am to 6pm that can help with all types of queries about minimum payments and persistent debt, contactable on 0300 303 2517.

  • Checkout the full guide and factsheet on persistent debt.

  • Take control of your financial future with their 7 Days, 7 Ways email programme; checkout all you need to know here.

Visit for more information:  https://www.stepchange.org/persistent-debt

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