What is Persistent Debt and how is it affecting me?
If you've only been making small repayments on your Credit Card or Storecard over the last 18 months you may have paid more in interest, fees or charges than towards paying off the amount you have borrowed on the Card. Under new rules, issued by the Financial Conduct Authority (FCA) this means that your account may be classed as being in 'Persistent Debt' and our aim is to help you avoid long term debt and also keep money in your pocket.
How would I know if I was in Persistent Debt?
If your account was deemed as being in Persistent Debt you may have received a letter from us, advising you that increasing your monthly payments would help you reduce your debt, lowering the amount of interest you would pay and cutting the overall time it takes you to pay back your balance. We will continue to review your account to see how you're doing with trying to pay more off each month over the following 18 months.
What are my options?
By paying a bit more each month over a regular period, you may actually save money in the long run by reducing interest payments and pay off your balance sooner. You can use the Calculator below to work out a monthly amount that ultimately helps to bring your account out of Persistent Debt.
If you are concerned about your financial situation please contact us on 0371 376 9214 to speak to our Customer Support Team. You could also contact one of the organisations at the bottom of this page that offer free and confidential support and advice.
If you have received a letter from us informing you that you need to start making your recommended payments to keep your account open, first thing to understand is this isn’t your contractual payment (your minimum payment remains exactly the same). However this payment will be higher than your minimum payment, but it will make sure you’re always paying more than your interest, fees and charges. This means you’re always paying down your Persistent Debt balance, and you will notice this ‘Recommended Payment’ will start to appear on your monthly statements. By sticking to these payments, you will be repaying your Persistent Debt balance over a reasonable period of 4 years.
Please note that we are also required to ensure that any new spending on your card also doesn’t enter Persistent Debt, so your recommended amount will change depending on your spending activity.
Under your current contractual terms you are allowed to continue making only your minimum payment, so don’t worry if that’s what you want to do. Unfortunately however, due to these new regulations – and to prevent you from incurring further debt – we would be required to suspend the use of your card. You will still need to repay your balance in full, but this could take considerably longer than 4 years, and once your balance has been paid off, your card will not be reinstated.
If you would like to know more about how your payments impact the time taken to repay in full, then please use the calculator below which will help you understand how long it would take you to repay based on your current payments.