Persistent credit card debt rules

Persistent debt is the label the Financial Conduct Authority (FCA) gives to a credit card account where, over the past 18 months, you have paid more in interest, fees and charges than you have repaid of the balance itself¹. The FCA's own consumer guidance puts it plainly:

FCA guidance for consumers²

The rule sits in the FCA's handbook: a firm must assess whether, over the immediately preceding 18 months, the amount a customer has paid towards the balance comprises a lower amount in principal than in interest, fees and charges³. It is not about missing payments. A person in persistent debt is paying every month, but so little that the debt barely shrinks.

The scale is large. The FCA's Financial Lives survey found that in 2024, 5% of adults, some 2.8 million people, were in persistent credit card debt⁴. StepChange estimates 2.5 million UK adults are in this position¹. When the FCA consulted on the rules, it found accounts in persistent debt were typically paying around £2.50 in interest and charges for every pound of balance repaid, and that between 220,000 and 250,000 accounts moved into persistent debt each month⁵.

The rules took effect in September 2018⁶. They require firms to write to customers at set points, to offer help to repay faster, and in some circumstances to suspend the card. This page explains each stage, what your provider must do, and where to get free help.

What persistent debt means: 18 months of paying more in interest than off the balance

The FCA defines persistent debt in its rule CONC 6.7.27R. The firm assesses whether the amount the customer has paid towards the credit card balance over the immediately preceding 18-month period comprises a lower amount in principal than in interest, fees and charges³. The rule is written into the FCA's 2018 instrument alongside the rest of the persistent debt package¹⁰.

Two details of the rule matter in practice. First, the firm must carry out this assessment at least once a month, so an account can drift into persistent debt without you doing anything differently⁸. Second, there is a floor: the persistent debt rules do not apply where the balance on the credit card or retail revolving credit account is below £200 at any point in the 18-month period⁸.

The behaviour that typically triggers it is paying only the minimum. StepChange describes persistent debt as making only the minimum payments for over 18 months¹. Among "revolvers", customers who carry a balance from month to month, the FCA's Financial Lives survey found 26% paid more in interest, fees and charges in 2022 than they paid off their cards, meaning they had persistent debt¹¹.

Being in persistent debt is not a default and not a missed payment. It is a signal, in the rules, that the customer is on a path where the debt is not being meaningfully reduced, and it switches on a set of duties for the firm. The FCA expected the rules to deliver total cost savings of between £3 billion and £13 billion by 2030³.

Which accounts are covered: credit cards, store cards and catalogues

The rules only applied to credit cards at first, but now apply to store cards and catalogues too¹². National Debtline gives the same picture for England and Wales and for Scotland⁷, and Business Debtline confirms the rules cover credit card, store card and catalogue accounts¹³. Store cards and catalogues are usually regulated by the Consumer Credit Act, which also covers store finance, personal loans and hire purchase¹⁴.

For store cards specifically, StepChange warns you may get a letter about persistent debt if you only make minimum payments¹⁵. For catalogues, the company contacts you after 18 months of persistent debt and asks you to take action to stop being in persistent debt by month 36¹⁶.

Business cards are treated differently. The persistent debt rules do not apply to a business credit card, meaning a card promoted solely for the purposes of the customer's business¹⁰. But the rules do apply to personal credit cards being used for business purposes, where the agreement is a regulated credit agreement³. A sole trader using a personal card for work purchases is covered; a card sold only as a business card is not.

The FCA has also said it is reviewing how credit card providers are implementing the persistent debt rules¹⁷, and StepChange has called for the rules to be extended further, including to persistent overdraft debt, following the FCA's high cost credit review¹⁸.

Why minimum payments keep a balance going

A minimum payment is usually split between an amount to reduce the balance and an amount for interest and charges¹⁹. The problem is that minimum payments usually only cover the interest and charges on a debt²⁰, and often the minimum payment is less than the interest being added¹⁹. In that situation the balance can grow even while you pay every month, and making minimum payments could mean you end up paying the debt over a long time²⁰.

The FCA tested this behaviour directly. Its Occasional Paper No. 44 found that prompts to pay more caused an average reduction in consumers paying only the minimum and a reduction in credit card debt, but the reduction was not sustained²¹. That is the gap the persistent debt rules are designed to fill: a structured series of interventions rather than a one-off nudge.

The numbers show why it matters. National Debtline gives an example where paying only the minimum payment on a credit card debt would take around four and a half years to clear²². The dedicated pages on credit card minimum payments and how long paying only the minimum takes cover the mechanics in more detail.

The timeline: letters at 18, 27 and 36 months

The rules work on a fixed schedule. The first letter is sent after 18 months in persistent debt⁷. If the account is still in persistent debt, a second letter follows around 9 months after the first, at 27 months⁷. After another 9 months, at 36 months, the lender writes again⁷. In total, at least three letters are sent⁷.

The first letter does three things: it explains that increasing your payments will mean you pay less back overall, it suggests contacting your lender, and it warns that the account could be suspended and your credit rating affected²³. Some lenders may have chosen to send persistent debt letters before this, but could only start doing this in March 2018²³.

Behind the letters sit firm duties. At 18 months, firms need to prompt customers in persistent debt to change their repayment behaviour if they can afford to³. After 27 months, the provider must send a reminder if it thinks you are still likely to be in persistent debt at 36 months². If you are still in persistent debt at 36 months, they must contact you again and give you options for increasing payments so that you repay the balance more quickly².

The same sequence applies to catalogue and store card accounts: the company contacts you at 18 months, again at 27 months asking you to take action again, and at 36 months with options¹⁶.

What your provider must offer after 36 months

At 36 months the duties get firmer. The FCA requires firms to identify all consumers still in persistent debt at 36 months and help them repay their balance more quickly¹⁷. Your provider must contact you and give you options for increasing your payments so that you repay the balance more quickly².

What those options look like in practice is described consistently across independent sources. The company should offer you a way to pay, which should take within three to four years¹⁶. The suggestions may include an affordable payment plan to clear the debt quicker, or paying off the debt with a loan or credit card; the firm may also consider pausing interest and charges, reducing your minimum payment, or suspending your account¹⁶.

Providers describe the same process in their own terms. Tesco Bank states that after 36 months it will review the account again, and if it is still in persistent debt it will be in touch with options to become debt free within four years, and the card may be suspended²⁴. Which? reports that 18 months after the warning letter, credit card providers must offer customers a method of repaying their balance over a reasonable period, which could be by reducing or waiving interest rates or charges²⁵.

Business Debtline's guidance adds that the lender will try to contact you to discuss your options, should try to help you find a way of paying the debt back more quickly, and may suspend your account only if there is a good reason²⁶. The narrow page on what happens when your account is suspended for persistent debt covers that stage in detail.

Repaying within three to four years: payment plans and other options

If more can be paid each month, the options are broader than simply raising the monthly amount. StepChange lists the main routes: increase the monthly repayments; repay the balance using credit with a lower interest rate; cancel the card and move the balance to a different one with lower interest; or get a loan that can be afforded²⁷.

As a guide to how much to pay, Tesco Bank suggests sticking to a monthly repayment amount that is double the interest, plus any fees charged on your account²⁴. The logic is straightforward: paying double the interest guarantees that a meaningful slice of each payment reduces what you owe.

Other routes exist depending on circumstances:

• A balance transfer moves the debt to a card with a lower rate, though usually for a fee.
• A money transfer can move funds to a current account to clear an overdraft or loan.
• A debt management plan, an informal arrangement with your creditors, may suit if you can repay your debts within 10 years²⁸.
• In Scotland, a protected trust deed is one formal option, but the Accountant in Bankruptcy notes alternatives such as the Debt Arrangement Scheme, refinancing if you have a lot of equity in your property, or bankruptcy if you cannot keep up payments for 4 years or more²⁹.

Whatever route is taken, the first step is the same: stop using the credit card being paid off, so the amount owed stops growing and repaying becomes quicker²⁰. StepChange's guidance for people facing reduced income says the same, to stop using credit cards or adding to credit card debt³⁰. The page on ways to clear card debt sooner sets these options out side by side.

If you cannot afford to pay more: forbearance on interest and charges

The rules do not demand money you do not have. The FCA's consumer guidance is explicit: if you cannot afford to increase your payments, your provider must take steps to make sure your fees do not mount up². Where the customer is unable to repay more quickly, the firm must show forbearance, for example by reducing, waiving or cancelling any interest or charges³.

This is not just a policy statement. Under CONC 7, where a repayment arrangement is in place as forbearance and the customer is meeting its terms, the firm must reduce, waive or cancel further interest or charges so that the level of debt does not rise during the arrangement³¹. Citizens Advice confirms the duty in plain terms: if you are not able to pay back what you owe, a company must help, which can include reducing or cancelling any interest or fees³².

In practice, National Debtline advises that 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 off²². The FCA also reminds firms that the persistent debt rules apply to customers in arrears, unless they are already receiving forbearance that is the same as or more favourable than the rules require¹⁷.

The narrow page on forbearance rights when you cannot afford higher repayments goes through what to ask for and what a firm must do.

Card suspension and when it can be avoided

Suspension is the sharp end of the rules. Your lender could suspend your card if you are in persistent debt for 36 months or more⁹. But providers 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. Which? makes the same point: lenders have the ability to suspend your card to stop you from borrowing²⁵.

The FCA's rules set out when suspension is required and when it is not. Where a customer does not respond to the firm's request, the firm must, at the end of the period specified in the request, suspend or cancel the customer's use of the credit card; the same applies where the customer confirms the options are sustainable but states they will not make the increased payments³. The FCA also expects firms to only suspend or cancel a customer's credit card where this is objectively justified¹⁷.

There is an important limit. The FCA's guidance states the expectation to suspend or cancel card use does not apply where suspension would cause a significant adverse impact on the customer's financial situation, for example where the customer depends on the credit card for essential living expenses¹⁰. Tesco Bank's own terms give customers 30 days to get in touch after a 36-month persistent debt letter before further action²⁴.

The practical message from every source is the same: responding to the letters, even to say you cannot afford more, keeps the account on the forbearance path rather than the suspension path.

Effect on your credit report and credit limit

Persistent debt itself is not a credit file entry, but the consequences can reach your file. The first letter warns that the account could be suspended and your credit rating affected²³. StepChange notes that the options a firm may offer after 36 months, pausing interest and charges, reducing your minimum payment, or suspending the account, could impact your credit file¹⁶.

The Bank of England's guidance is blunt about the underlying behaviour: failing to pay debts, whether secured or unsecured, can affect your credit rating³³. StepChange also notes that a creditor in persistent debt may ask you to increase your monthly payments and may decide to remove your access to that credit³⁴.

This connects to two wider pages: how credit cards affect your credit file and what happens when your provider cuts your limit. If your account is suspended, the debt does not go away: you still owe the balance and must keep making the agreed payments.

Getting out of persistent debt, and free help

Getting out of persistent debt means changing the ratio: paying more towards the balance than you pay in interest and charges. StepChange's persistent debt pages set out the practical steps, and its debt advice is free, online or by phone¹⁹. National Debtline publishes detailed guides to the persistent debt rules for England and Wales and for Scotland¹², and Business Debtline covers the same ground for the self-employed²³.

Free help is available from several places:

• StepChange Debt Charity offers free debt advice online¹⁹.
• National Debtline provides the persistent debt guides and wider debt information¹².
• Citizens Advice helps you check whether a financial service has followed the rules, including the duty to help customers in long-term credit card debt³².

If you believe your provider has not followed the persistent debt rules, you can complain to the firm and then to the Financial Ombudsman Service; the page on complaining about a credit card provider explains the process.

Two wider points are worth knowing. StepChange estimates that almost half, 46%, of those in persistent debt have subprime card debt, and it has called on the FCA to reduce the length of time before firms are required to intervene to support struggling customers³⁵. The rules apply across the UK, though the formal debt solutions differ, as the pages on credit card debt in Scotland and credit card debt in Northern Ireland explain. The section page on help with credit card debt and the wider debt guide list every free option, including debt management plans and formal insolvency solutions.