persistent debt

Have you been making the minimum payments while paying your monthly credit card bill? If the answer is yes, you may be setting yourself up for a huge debt in the next few years.

Credit card companies are clever. They know that college-going students and youngsters don’t know how the credit card bills are calculated. Hence, these innocent folks are more likely to fall in the trap of minimum or low payments and overtime develop a persistent debt.

persistent debt

No matter how luring the low-interest rates might seem to you, if you default even once, you will end up paying a 12 percent levy on each purchase you make while you have an outstanding balance on your credit card. Not to forget the compounding interest that will kill you if you continue to default over the next few months.

What is persistent debt?

A credit card user is considered to be in persistent debt when they have repaid a lower amount than the amount that they owe(including interest, fees, and charges) to the credit card company. This is calculated after every 18 months. The rules of persistent debt are supposed to help both the customer and the credit card company.

The credit card company can intervene after every 18, 27 and 36 months. As of now, the credit card companies in the United Kingdom have successfully implemented the new rules of Persistent Debt.

If the customer continues to delay total payment and makes a minimum payment for straight 18 months, the credit card company is obligated to intervene and inform them about their situation. The Financial Conduct Authority (FCA) has ordered the credit card companies to warn the customer of possible repercussions if they continue to make minimum payments for the next 18 months.

How do I get out of Persistent Debt?

The first step you can take to get out of Persistent Debt is to double your monthly payments and never make the minimum payment again. By doubling your payment, you can reduce the interest, fees, and charges.

Remember that, if you fail to improve your situation in the next 18 months, your credit card company can suspend your card and you will be in deep trouble as your credit history will suffer massively. The only way to improve your situation is by paying twice or thrice the amount of the number om your screen. This way you can clear your debt quicker and will have to pay fewer fines and charges.


When you are in persistent debt, you are no longer a borrower but now seen as a debtor by your credit card company. And, for you,  this is an unfavorable category to fall into. This may also lead to your credit card suspension.

Before they cancel your credit card, they will inform you of other easier repayment options that are recommended by the Financial Conduct Authority(FCA). Which include transferring your debt to a fixed-sum unsecured personal loan or increase the amount on the monthly bill to force you to clear your debt early.

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