Persistent Debt

Have you received persistent debt letters? Are you unsure what persistent debt is or how you can pay it off?

Then you’re in the right place.

You may have received a letter from your lender telling you that you are in persistent debt.

This article will explain all there is to know about persistent debt and show you how to work your way out of it.

It can be confusing being told you are in debt, especially when you never miss making your monthly payments.

Once you have finished reading our article, all your confusion will be gone and you will know a clear plan of action to clear your persistent debt balance.

What is Persistent Debt?

Persistent debt is when over a period of 18 months, you have paid more in interest and charges than the amount of borrowed money that you have repaid.

This kind of debt is more likely to occur if you are only making minimum payments on your personal debts.

If you are only paying back a small amount of your debt each month, then a majority of the payments will be put towards paying the interest off, rather than the amount owed.

The main problem with this is it can take a long time to repay debts and you may end up paying way more than originally borrowed.

Why did the FCA introduce rules about persistent debt?

The Financial Conduct Authority (FCA) introduced new rules surrounding persistent debt in 2018.

The new rules were put in place to help individuals pay off their debts quicker and to reduce the added costs of borrowing.

Since September 2018, the FCA has regulated lenders and informed them that they must contact customers who have fallen into persistent debt.

To begin with, these rules were only applicable to credit cards but have since been made applicable to store cards and catalogues.

Why is my lender writing to me about persistent debt?

Due to the new rules outlined by the Financial Conduct Authority (FCA), lenders have to write to their customers who are in persistent debt. They will send at least three letters.

After 18 months

If you have been in persistent debt for 18 months, then you will receive your first letter.

The primary letter will explain that in order to escape persistent debt, you need to increase payments, which will mean you pay back less interest over time.

It usually will suggest you contact your lender to discuss increased payments and to encourage customers to start paying more.

It will warn you that if you continue making minimum payments of the same amount, your account could be suspended.

A suspended account could impact your credit rating negatively, so it is in your best interest to increase to a higher monthly payment.

After 27 months

If you continue to make the minimum repayments each month, then you will likely receive another letter after 9 months.

This letter tends to repeat what the first letter states, advising you to increase your payments to reduce your interest fees and charges over time.

After 36 months

After 36 months, your lender will contact you again. They will try and get in touch to provide free debt advice and help you find a more suitable repayment plan.

It is around this time that they will consider suspending your account. They will only do this if there is no other reasonable option available.

Make sure you reply to this final letter, as if you don’t your credit card provider will almost definitely suspend your account.

You won’t be able to borrow money, your credit rating will be impacted, and you will struggle to open new accounts.

I just got an ‘action letter’, what do I need to do now?

The action letter is the letter you receive after 36 months in persistent debt.

It will strongly suggest that you increase your minimum payment, however, this doesn’t mean you legally have to.

If you are meeting your minimum payment goal each month, then you are abiding by the terms of your repayment contract, so you cannot be forced to boost your payments.

Simply doing nothing likely isn’t your best option. Always talk openly with your lenders, as the more they know about your financial situation, the more they can help.

For example, if you have more than one debt to repay, this will be taken into account if it comes down to whether or not to suspend your credit card.

If you ignore your credit card provider, refuse to increase the minimum payment, and continue to pay extortionate interest fees and charges, then you are likely to get your credit card suspended.

Keep reading to learn what options you have that will help you get out of persistent debt.

What’s wrong with paying the minimal amount?

Minimum repayments are the smallest sum that you can pay each month, that your creditors agree to.

Paying the smallest monthly payment can make your finances more manageable, however, it can be costly in the long run.

For example, let’s say you have £5,000 worth of debt and an interest rate of 20%. Minimum payments mean you can pay £50 toward your debt each month, but you will be paying over £80 in interest rates.

It is clear that small repayments with large interest rates attached are unsustainable and make it difficult for individuals to repay their debts.

What happens if I pay more than the minimum payment?

If you increase your repayments, even by a few extra pounds, you will reduce your account balance quicker, as more of the payment is going towards your debt, rather than the interest rate fees.

Just a small increase can make a huge difference in helping you get away from unnecessarily expensive debts and improving your financial situation.

Credit card customers that increase their monthly repayment can end up saving money and are more likely to get out of long term debt.

It is important that you consider your finances and other essential living expenses before committing to paying a higher amount per month.

Consult a money advice service to receive free advice about getting out of long term debt.

How can persistent debt affect your credit score?

In the short run, persistent debt won’t have a big impact on your credit score, provided you are making your monthly repayments.

If you miss your repayments, this is when the problems may arise and you find yourself in a difficult financial situation.

If your lender halts interest as you need extra help or your account gets suspended, then this can negatively impact your credit score.

Continue reading to find out how to reduce the amount of interest you are paying and how to protect your credit score.

What happens if I can’t pay any more towards my debts?

If there is no possible way of increasing your monthly minimum payment, then you should contact a debt advisory service for free, confidential advice.

You could consider a consolidation loan as a last resort, by which you could repay your creditors.

The best way to avoid any hassle with persistent debt is to act early before the matter escalates and you end up paying a lot more money than you initially owed.

What happens if I ignore debt letters?

To begin with, if you choose to ignore debt letters from your lenders and credit card provider, it is unlikely that action will be taken against you, so your credit file shouldn’t be impacted.

If you continue to ignore the debt help letters and persist with making low repayments then your debt problem will only heighten.

The Financial Conduct Authority regulations ensure lenders send notices to make their customers aware of the consequences of paying the minimum amount.

The letters aren’t there to threaten or scare the customer but to make them aware of the situation they are entering and try to offer them debt help.

Paying interest and charges makes the likelihood of paying off overhanging debts much lower, so make sure you read your debt letters and take the appropriate action to clear your outstanding balance.

Can my creditor suspend my account?

If you have continuously ignored the lender’s attempts to contact you, your credit or store card may be suspended by the credit card providers.

You will still have to make your fixed monthly payment and pay interest, so it is crucial to speak with your credit card company to ensure this doesn’t happen.

Your creditor may also choose to take legal action and they could even pass your details over to a debt collection agency.

What if I need my credit cards to pay essential bills?

If the suspension of your credit card will make your wider financial situation significantly harder, then it is important for you to discuss this matter with your card provider.

They will be able to take into account your economic circumstances and consider whether another course of action needs to be taken to ensure you can still repay your additional debts.

If you are concerned about being able to pay your essential bills, then you may need to consider reaching out for debt advice.

How can I get out of persistent debt?

Persistent debt doesn’t have to become a permanent problem in your life.

You can repay your credit card balance by one of the following methods:

Speak to your credit card provider

Talk openly and honestly to your credit card provider. They may consider suspending interest fees and charges for a reasonable period or payment holiday.

You might even consider moving your persistent debt over to a loan at another bank.

If you are considering this option, let your credit card company know and they might offer you a better deal to try and maintain you as a customer.

Increase your minimum payments

As we have mentioned many times in this article, the simplest method to get out of persistent debt is to increase the amount of money you are repaying each month.

If this is a plausible method for yourself, then great! By repaying more each month, more is put towards your actual debt, rather than the lending fees.

This may not be an option for everyone, especially if you have other debts and essential bills to pay.

If you cannot afford to increase your fixed amount per month, then you should consider what other options you might have.

Keep reading to learn more about plausible options for those who can’t simply increase their payments.

Use the ‘avalanche method’ to pay off the most expensive debts first

The avalanche method is a popular and proven method to repaying multiple debts in a reasonable period, without having to get new credit.

You direct all your spare money towards the debt with the greatest interest rate, while paying the minimum amount on your other debts.

Once the first debt has been repaid, the spare funds will then be focused on the next highest-interest debt, and so on.

To start this method, you should rank all of your debts and note the interest fees and charges attached to each one.

Then, simply start by funnelling the most funds into the credit card debt which has the highest interest attached.

It may also be worthwhile contacting your credit card providers to ask for a reduction of your interest rates, as sometimes they will consider.

Transfer your card debts to a 0% balance transfer card

A balance transfer involves getting a new credit card to pay off an old debt.

You owe the new credit card company, instead of the original, and usually will start with a 0% interest rate.

This can help you repay the money quicker, as more of your payments will go towards the debt itself rather than the interest and charges.

Remember that when you apply for a new credit card, this is listed on your credit report.

One new credit card won’t make much of a difference, however, multiple will negatively impact your credit score.

Always try to keep your minimum repayment costs high on the new card, to make sure you can pay your credit card balance off with no issues.

Limit credit card spending and increase your monthly payments

One way to save money on rates is to reduce spending on your credit card and try to increase the fixed amount you pay each month.

By doing this, you will see your credit card balance reduce much quicker.

Consolidate your debts into a personal loan

If you have more than one debt to pay off, and you are being contacted to make increased payments on them all, it may be worthwhile considering a personal loan.

A personal loan will mean that you make one regular payment, rather than multiple to different credit card providers.

If this is an option you are considering, speak with a professional debt advisor, as taking out credit to pay off other credit can be risky.

You may end up in a stickier situation than you were in to start with, so it is best to get expert advice on whether this is the best choice for you.

Consider ways you could pay off this debt quicker

It is always advisable to seek out debt help, which is often free and always confidential.

They will be able to advise you on other ways to pay off the debt in a way that suits your unique financial circumstances.

They may suggest options such as:

  • Short term borrowing
  • Requesting a payment holiday
  • Making one-off additional payments
  • Start a slightly higher direct debit to increase your minimum repayment value

Contact a debt advice service as soon as you receive your first letter about the persistent debt, to make sure you stay on top of it and don’t let matters escalate to the point that you struggle to pay.


Finding out you are in persistent debt can be confusing, stressful and you may feel blind-sighted.

All you need to remember is that you are being told you are in persistent debt to help you save money.

The Financial Conduct Authority made the new rules to help individuals who are unknowingly paying excessive amounts on interest, to help them reduce the additional costs of borrowing money.

There are many options to consider which will help you get out of persistent debt and focus on repaying your debts alone.

Speak with a trusted debt advisory service as soon as you receive your first persistent debt letter.

Persistent debt doesn’t have to become an overhanging problem, you can work your way out.

All you need is a little help and to know what your options are.

If you have reached the bottom of this article, then now you will know all you need to know about combatting persistent debt.

So, get your plan into action!