What counts as persistent debt
The FCA’s rules (CONC 6.7.27R) look at any 18-month period. If, over those 18 months, the interest, fees and charges you paid add up to more than the amount you paid off the balance, your account is in persistent debt. It doesn’t mean you’ve missed payments: paying only the minimum on a high-rate card often gets you there.
The rules apply to credit cards and store cards. They don’t apply to loans, which have a fixed end date.
At 18 months
Your provider must contact you. It has to tell you that paying more would clear the balance sooner and cost less, that you’re in persistent debt, and where to get free, independent debt advice. It should also say that if the pattern continues, your card may be suspended.
There’s nothing you must do at this point, but it’s a good moment to look at increasing your payments.
At 27 and 36 months
If nothing has changed by 27 months, your provider sends a reminder. At 36 months, if you’re still in persistent debt, it must offer you ways to repay the balance in a reasonable time, usually 3 to 4 years. That might be a higher fixed payment, or a lower interest rate or waived charges if you can’t afford more.
If you don’t respond, the provider can suspend or cancel your card, so you can’t use it for new spending. If you can’t afford to pay more, it must treat you with forbearance: options can include reducing, waiving or cancelling interest and charges.
An example
You owe £3,000 at 24.9% APR and pay only the minimum, interest plus 1% of the balance. In month 1 you pay £86.66, of which £56.10 is interest and £30.56 comes off the balance. That pattern continues: on our calculator, this card reaches persistent debt at month 18, and again at month 36. Paying only the minimum, it takes 27 years 11 months to clear.
Keeping the payment at £86.66 instead of letting it fall clears the card in 4 years 9 months. That’s close to the 3 to 4 years a provider would offer at 36 months.
What you can do
- Pay a fixed amount above the minimum each month, by direct debit.
- Answer your provider’s letters, even if you can’t pay more. Explaining your situation keeps more options open.
- Get free advice early. MoneyHelper has free, confidential help and can point you to debt advice. You don’t need to pay a company for this.
- Think about a 0% balance transfer if your credit record allows it, but only with a plan to clear it. See balance transfers explained.