The Financial Conduct Authority (FCA) have introduced new rules with the aim of helping customers avoid long-term debt. If you've been making minimum or low payments over the past 18 months, you may have paid more in interest, fees and charges than the basic cost of your purchases. Under new rules, this means your account is in 'Persistent Debt'.
How will I know if my account is in Persistent Debt?
We'll write to you if your account is in Persistent Debt and let you know what steps you can take to better your situation.
Have I done something wrong?
As long as you've been paying the minimum amount due, this is in line with what's required under your credit agreement. Don't worry, you haven't done anything wrong.
What do I need to do?
It's important that you continue to make at least the minimum payment due on your statement, so your account stays up to date. However, we recommend that you pay more than the minimum amount on your statement, where you can afford to do so, to reduce the amount of interest charged and clear your balance quicker.
Here’s an example to show how increasing your regular payment will reduce the amount of time it takes to pay off your balance:
Using our example of repaying £1,400 on your account at an interest rate 58.7% (payment due every 28 days).
If you carry on with your current fixed minimum payment
£56 - minimum payment
| 3 years, 10 months | £1,384 | |
| time to pay off your balance | interest paid |
If you fix your payment at a higher rate (minimum payment + 20%)
£68 - fixed payment
| 2 years, 8 months | £887 | |
| time to pay off your balance | interest paid |
If you fix your payment at a higher rate (minimum payment + 50%)
£84 - fixed payment
| 1 years, 10 months | £613 | |
| time to pay off your balance | interest paid |
To see how long it'll take you to pay off your balance, and how much you could save on interest by increasing your payment amount, visit our Repayment Calculator.
How much do I increase my payments by?
If you pay more than your minimum payment, you'll save money in the long-term, and reduce the amount of interest applied to your account.
How can I increase my payments?
Our Repayment Calculator will help you work out how long it will take you to pay off your balance and how much you could save on interest by increasing your payment amount. To do this, visit our Repayment Calculator.
After you've worked out an affordable repayment amount, you can increase your payments by:
- Going to 'Make a Payment' from your online account
- Contacting us
You can also make one-off additional payments whenever you can afford to. Alternatively, you can pay your balance off in full at any time.
What happens if I continue paying the minimum payment?
If your position remains unchanged in the 18 months after we first notified you that your account was in Persistent Debt, we'll write to you again.
We'll work with you to repay your balance over a reasonable period, at an amount that's affordable for you – this may involve us having to suspend your credit facility. If this happens you won't be able to shop on your credit account.
What if I can’t afford to increase my payments right now?
We appreciate that you may not be able to increase your payments right now – but it's important that you continue to pay at least the minimum payment, to keep your account up to date and avoid charges. If things change for the better, even paying a small amount more every 28 days (or making a one-off payment, if you can) could make a difference.
If you need some help budgeting, there are budget tools available.
Can I continue to use my credit account?
Yes. Unless we've contacted you to advise otherwise, you can continue to shop with us and use your credit account.
However, we'll continue to review your account, and if your position remains unchanged in the 18 months after we first notified you that your account was in Persistent Debt, we may have to suspend your credit facility.
Will my credit score be affected?
No, there is no direct link between Persistent Debt and your credit score, providing you keep your account up to date by paying at least the minimum amount due by your statement date.
Help and support
Independent financial help:
- Step Change Debt Charity: for debt advice throughout the UK, phone 0800 138 1111 or visit www.stepchange.org
- PayPlan: for debt advice throughout the UK, phone 0800 280 2816 or visit www.payplan.co.uk