If you’ve been contacted by your lender with a ‘persistent debt’ notice, in summary, this is your lender dutifully flagging to you you’ve been paying the minimum monthly payment requested by them, for a consecutive 18-months.  The result being, over this time period you’ve now paid more in interest, charges and fees than you have paid off of your debt. 

These notices are a result of fairly new rules introduced by the FCA (Q1 2020), whereby providers must encourage their customers over an18-month process to contact them or simply pay more off their actually balance, rather than just paying the minimum repayment that covers fees, charges and interest and only 1% of the debt balance. 

The FCA wants firms to help customers reduce their level of debt on their credit and store cards and be well advised on paying less in interest, over a long period of time.

The lenders persistent debt process 

Firstly, there is no need to worry when first contacted by your lender.  There is time to decide during the communication process that your provider will go through with you, and the best thing to do is communicate back at the earliest opportunity.  

+18 months: Your lender writes to you (persistent debt notice) to encourage you to pay more than the minimum payment every month, or, if you cannot increase your repayments, discuss your situation with them. 

+27 months: A follow-up comes in writing at 27-months, reminding customers of the first contact and urging you to pay more money per month than just the minimum payment, or, asks you to discuss your situation, if you can’t afford to up your repayments.

+36 months: Your lender writes to you to now take action, as the persistent debt has been consecutive for three years.  Either agree to a repayment plan to pay off your credit card, or you must explain that you can’t pay more. If you don’t act, they may suspend your card, so the best thing to do is get in contact and discuss your personal situation.  They are obliged to help you with your outstanding debt, and there are several ways they can do this.

If consumers are concerned about persistent credit card debt and/or have multiple credit cards they are dealing with, they can find information about free debt advice from National Debt Helpline, StepChange, or Citizens Advice

NOTE: The Financial Conduct Authority (FCA) has introduced rules that mean providers must grant a minimum three-month repayment freeze to anyone struggling to pay their credit card debts due to the coronavirus pandemic.