Skip to content

Persistent Debt – What Does it Mean for Your Credit?

Persistent debt can affect your credit rating for a significant time period. Read to find out more.
A man holding up blocks with the word Debt on them.

If you have been making minimum repayments on your credit card for some time, you may have fallen into the trap of persistent debt. It is a warning that your debt could become unmanageable (if it isn’t already) and means that for at least eighteen months, you have been paying more interest and fees than you have towards the amount you borrowed.

But what does persistent debt mean for your credit? We cover everything you need to know:

What is Persistent Debt?

Persistent debt is used to describe a situation where you are unable to pay off your debt. This can happen for several reasons, such as a high debt-to-income ratio or extremely high-interest rates. It can be a highly stressful situation to be in and can lead to damaged finances if not acted on.

You will be classified as being in persistent debt if you have received a letter from your lender notifying you that you have been paying more in charges and fees than you have been paying towards your debts. This is most likely to occur if you are only meeting the minimum payments on your debts.

Just making minimum payments each month could cause your interest fees to rack up considerably. Therefore, it could take you longer to pay off your debt, as your payments mostly go towards interest charges.

Credit Card Persistent Debt Rules

A man pushing a Credit Card.

If you slip into persistent debt with your credit card, your credit card provider will get in touch to let you know and offer to help. Under rules introduced by the UK FCA (Financial Conduct Authority), your credit card provider must make you aware of the potential implications of continuing with minimum repayments and its possible effects on your credit file.

Depending on how long you are in persistent debt, they must also set out ways to allow you to repay your outstanding balance within a ‘reasonable’ period – typically between three and four years.

The timeline that your credit card company will follow under FCA’s persistent debt regulation is as follows:

  • After 18 months of minimum payments, you will receive a persistent debt letter from your card provider, requesting that you increase your minimum repayment to reduce the chances of falling into long-term persistent debt.
  • After 27 months, you will be sent another persistent debt letter with a similar message if you are in the same position and have not raised your monthly repayments. Your lender may suggest an increased amount again or a new repayment plan.
  • After 36 months, your credit card provider will write to you a third time if you still have not increased your minimum payments by this time. They will either increase this amount, offer you a way to repay your balance in a reasonable period, or suspend your credit card.

Being contacted about credit card persistent debt can be worrying but try not to stress about it too much.

How likely is it that my Credit Card could be suspended?

Your credit card will only be suspended if you have been in persistent debt for 36 months or more. However, this is usually a last resort that is only used if you consistently ignore your credit card provider’s attempts to contact you. One of the only other reasons your credit card could be suspended is if you agree to make larger monthly payments. In this case, your credit card provider may decide to suspend your card to prevent further debt from accumulating.

Does Persistent Debt affect Credit Score?

In the short term, persistent debt shouldn’t affect your credit score as you’re still making repayments on what you owe. However, the problem arises if you begin to miss payments, which will cause a change in your credit rating.

Similarly, if you require additional support and your creditor freezes interest or suspends your account altogether – this will probably negatively impact your credit score.

How do I pay off my Persistent Debt?

A woman holding a persistent debt letter.

To pay off your credit card persistent debt, you first need to understand your budget to identify where you can cut back on spending and put a spending plan in place. You will need to determine whether you can afford the payments on your debt and if you can pay any extra to raise your minimum prepayments.

If you have more than one debt, then don’t just focus on the credit that you have received a persistent debt notice on – your plan should consider all of your debts.

Additionally, working out a household budget can be a useful way to understand where your money is going and how you can cut back to maximise your income.

Once you get to grips with your budget, you can then consider one of the following options to get out of credit card persistent debt:

  • Pay the same amount each month - choose an affordable amount that is more than your current minimum payment and stick to it.
  • Pay your minimum payment with an additional fixed amount each month - paying even just a few extra pounds every month can make a substantial difference.
  • Make one-off additional payments when you can afford them - doing so can clear your debt faster, but you will still need to pay at least the minimum payment every month on top of it to avoid breaching the terms and conditions of your credit card. (A Debt Consolidation Loan may help you if you choose this option.)

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

If you have been in persistent debt for at least thirty-six months and cannot afford to raise your monthly minimum repayments, your credit card provider will contact you to agree on a way of clearing your debt. They should always provide you with options for repaying your debt more quickly. For instance, they may suggest a low-interest loan if you can repay it in a reasonable amount of time.

If you cannot afford this, then they will give you another option, which could be reducing or writing off the interest that has been added to the amount you borrowed. If the creditors do this, then they will likely suspend your account.

Ultimately, if you cannot afford to increase your repayments to reduce your persistent debt, it is a sign that you need debt help and should speak to someone about your financial situation.

Should I Consolidate my Debts with a Personal Loan?

Suppose you have multiple debts, and your credit providers ask you to make increased payments on each. In that case, you could use a consolidation loan to pay them off, leaving you with just one manageable payment rather than juggling several payments to different creditors.

It can sometimes be an effective way to cut the cost of your debt if the APR offered on the consolidation loan is less than the interest on all your debts. However, this is something you should always check before taking out a loan to repay debts.

It is important to remember that applying for a personal loan will involve an in-depth search of your credit report, which can lower your credit score in the short term, but it should improve as long as you do not apply for credit regularly and make consistent and timely repayments.

Top Tip:

Acting early on your persistent debt situation could stop it from getting worse. So, whether you use a consolidation loan or increase the minimum repayments you pay each month, dealing with your debt as quickly as you can is the best course of action.

An arm reaching out to an Apply screen.

How Consolidation Express can help with your Persistent Debt

Being in persistent debt is a sign that you may be struggling with your finances. We may be able to offer you the help you need with one of our debt consolidation loans. If you qualify, you could have the money you need paid directly into your bank account.

To see if you qualify, click the button below.

Apply Now
An advisor pointing to a screen displaying Rep APR.

APRs from 5.8% to 89.9%

We are a broker, not a lender.

Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

Secured Representative 11.7% APR

If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

Further reading

What are the Different Kinds of Unsecured Loans?

Understand what an unsecured loan is, and how best to use the different kinds of unsecured loans in 2023.

What are the Different Types of Secured Loans?

With so many different types of loans available, it can be difficult to know which is right for you. For more information on secured loans, read this expert article.

Should you pay off Credit Card or Loan first?

Unsure whether to pay off credit card debt or loans first? We cover factors that can affect which debt to prioritize and the options available.