When You Cannot Afford to Pay More: Forbearance Rights

If your credit card company has written to you asking for higher monthly payments and you cannot afford them, the law is on your side in one specific way: a firm must treat customers who cannot afford to increase their repayments with forbearance¹. That means it has to work with what you can actually pay, not demand a figure you cannot meet.

The letters usually arrive because of the persistent debt rules. Credit card companies must help you if you have been in credit card debt for more than 18 months². If you are still in persistent debt at 36 months, the firm must contact you again and give you options for increasing payments so that you repay the balance more quickly³. If you cannot afford to increase your payments, the official guidance is to talk to your provider about how they can help³.

What follows is what those letters mean, what a firm can and cannot do, how repayment plans work, what happens to your card and your credit file, and where to get free help.

Persistent debt: when your card company must step in

Persistent debt has a specific meaning in the rules, and it is about time rather than amount. Credit card companies must help you if you have been in credit card debt for more than 18 months². At that point your credit card company will write to you and ask you to increase your monthly payment⁶.

The letter is not a demand for a figure the firm has invented. It explains that increasing your payments will mean you pay less back overall, suggests contacting your lender, and warns that the account could be suspended and your credit rating could be affected⁷. The rules behind it require the firm to explain that increasing payment reduces cost and time to repay, to provide contact details for a debt advice body, to set out the options for increasing payments and ask for a response within a specified reasonable period, and to tell you the card will be suspended or cancelled if no response is received⁸.

If you are still in persistent debt at 36 months, the firm must contact you again and give you options for increasing payments so that you repay the balance more quickly³. This is the point at which the pressure increases, and it is also the point at which forbearance matters most: firms must treat customers who cannot afford to increase their repayments with forbearance¹.

The practical point is that the letter is a conversation, not a bill. A firm that has followed the rules will have told you what it wants and by when. What it cannot do is treat a customer who genuinely cannot pay more as though they simply will not.

Repayment plans to clear the balance over a set time

The options a firm sets out are usually a menu rather than a single instruction. They include increasing your monthly repayments, repaying the balance using credit with a lower interest rate, cancelling the card and moving the balance to a different one with lower interest, getting a loan you can afford to repay, and shopping around using a price comparison site⁹.

Two of those deserve care. Moving a balance to a card with a lower interest rate only helps if the new deal lasts long enough and the fee does not outweigh the saving; the mechanics are set out in balance transfer credit cards explained. Repaying the balance using credit with a lower interest rate, such as a balance transfer or an affordable loan, is a recognised route¹⁰, but a credit card cannot be used to pay off a loan¹¹, so the two cannot simply be swapped in either direction.

Many creditors agree to temporary payment arrangements which help you pay what you can afford instead of the whole amount¹². These are short-term by design and are usually reviewed. Where a longer arrangement is needed, a debt management plan is a common route: repayments can be flexible if your circumstances change¹³, and the plan is built around what you can afford rather than what the firm first asked for.

If you cannot afford the plan your card company offers

This is the situation the forbearance rule exists for. If you cannot afford to increase your payments, the official guidance is to talk to your provider about how they can help³, and firms must treat customers who cannot afford to increase their repayments with forbearance¹.

Forbearance is not a single product. It can mean accepting a lower payment for a period, reducing or cancelling interest and charges, or agreeing a plan that clears the balance over a set time. A firm must help if you are struggling to pay back what you owe, and that can include reducing or cancelling any interest or fees².

If the firm will not move, there is a route. You can check whether a financial service has followed the rules, and complain if it has not². Complaints about a card provider go first to the firm and then, if unresolved, to the Financial Ombudsman Service; the process is set out in complaining about a credit card provider.

It also helps to know what the firm is looking at. If you need to increase your credit limit to make ends meet, it could mean you are struggling to manage your finances, and an increase could make your situation worse¹⁵. That is a warning sign rather than a solution, and it is the kind of signal a lender is required to act on: lenders must warn you before raising your limit, and cannot increase it if you have said you are not interested or are showing signs of financial difficulty¹⁶.

Your card can be suspended while you repay

Suspension is the outcome the letters warn about, and it is worth understanding exactly what it means. If your account is suspended, you will not be able to borrow any more money, and if you have a credit or store card, the card will no longer work⁷. The same applies in Scotland¹⁸.

Firms say they only suspend cards as a last resort, and they are more likely to do it if you ignore them or do not attempt to increase your payments⁹. In other words, the suspension usually follows silence rather than hardship. A customer who replies, explains their position and agrees a plan is in a different position from one who does not reply at all.

There is a second side to it. A suspended card cannot be used, which means the balance stops growing, and that is the same effect as choosing to stop spending on it. For someone trying to clear a balance, that is not only a penalty.

If a firm does suspend or cancel your card, it still has obligations. Guidance updated in November 2024 reminds firms of their obligations when suspending or cancelling credit card use⁸. Suspension does not write off the debt, and it does not stop interest that has already been charged from being owed.

Warnings when you get close to your credit limit

Being near your limit is a separate trigger from persistent debt, and it comes with its own warnings. Some credit cards have a credit limit, meaning you will be charged if you go over it¹⁹. If you go over your credit limit the provider may charge you a fee²⁰, and charges and interest can be added if you go over the limit, which makes it harder to get further credit in future²¹.

The industry agreed a remedy for this: notifying customers when they are close to their credit limits, agreed for implementation in July 2018²². Alongside it, lenders must warn you before raising your limit, and cannot increase it if you have said you are not interested or are showing signs of financial difficulty¹⁶. New customers are given the choice of how credit limit increases will be applied to their account, with customers who do not make a choice offered increases on an opt in basis by default²².

You can also take the decision out of the lender's hands. Opting out of letting the lender offer you automatic credit limit increases is a standard piece of card management advice²¹. Some providers go further: Nationwide states that it will not increase your credit limit unless you ask¹⁶. Others set their own rules, such as not accepting a credit limit increase application in the first 6 months after a card is opened²³.

If you do want a higher limit, you can talk to your bank and see if they are happy to raise it, and your bank will have another look at your credit rating and financial situation to decide whether to increase your limit²⁴. The page on credit card limits covers how limits are set, raised and lowered.

What happens if you ignore the letters

Ignoring a persistent debt letter is the single decision most likely to make things worse. Some of these letters have strict deadlines and your creditor can take further action if you do not reply²⁵. If you do not reply to the creditor's letter, they may start court action²⁶. The page on unpaid card debt and court action explains what that involves.

The first letter itself sets out the stakes: it explains that increasing your payments will mean you pay less back overall, suggests contacting your lender, and warns the account could be suspended and your credit rating could be affected⁷. None of that happens automatically on day one, but it is the direction of travel if the letter goes unanswered.

If you are not sure what to do, free and impartial help exists. StepChange, National Debtline and Citizens Advice all give free debt advice, and the page on help with credit card debt sets out the options. If you are in Scotland, the rules and the available solutions differ, and credit card debt in Scotland covers them; for Northern Ireland, see credit card debt in Northern Ireland.

Will agreeing to a repayment plan affect my credit file?

Usually, yes, and it is better to know this before you agree than after. Making reduced payments towards a debt can impact your credit file, and this could make it hard for you to take out more credit²⁷. Your credit file will be affected any time you pay less than what you agreed to when you took out the debt²⁸.

The detail varies by arrangement. On a debt management plan, you make lower payments to your debts, so the plan affects your credit rating²⁹, and because payments are lower than what you agreed, arrears build up each month and are recorded in the payment history³⁰. A plan may not be directly recorded on your credit file, but the lower payments may mean it is harder for you to get credit, and for a sole trader this can make it much harder to run your business³¹. Lower payments are typically marked as partial payments on your credit file³¹.

Where a payment is missed altogether rather than reduced, the effect is starker: your credit file will show that you did not make your agreed payments, which impacts your credit score³². The wider picture of how card behaviour feeds into your file is covered in how credit cards affect your credit file.

The trade-off is real and worth stating plainly. A plan that clears the debt over a set period will usually leave a mark on your file, but so will the alternative of missed payments and mounting arrears. The difference is that a plan has an end date.

Will my card company freeze the interest if I cannot afford to pay more?

It can, and asking is the point. A company must help if you are struggling to pay back what you owe, and that can include reducing or cancelling any interest or fees². If you cannot afford your monthly payments, it may be possible to get interest and charges frozen, and in some cases you may be able to have your debts reduced or written off³³.

There is no automatic freeze on credit cards in the way there is in some other markets. Payday lenders, for example, are expected to freeze interest and charges if you make repayments under a reasonable repayment plan or after a maximum of 60 days of non-payment³⁴. On credit cards the freeze is a matter of forbearance and negotiation rather than a fixed rule, which is why the conversation with the firm matters.

It also helps to understand how the interest is working against you. If you do not pay off the full amount every month on a credit card, you will be charged interest on the whole lot, not just the unpaid amount³⁵. If you do not pay it off, you may be charged interest on the amount outstanding²⁰. That is why a freeze, where a firm agrees one, changes the arithmetic so much: it stops the balance working against the payments you are making.

One related right is worth knowing. The page on rejecting an interest rate rise sets out how that works.