Debt interest may be waived for persistent debtors who cannot pay.

Aytoun27

StopIt wrote: »

If you're making minimum payments on an interest bearing credit card, a reply of 'I'm not in debt, thank you very much' would be a lie. In fact, this may be a wake up call to those who think that credit card debt somehow doesn't count as "real" debt..

Whether or not it’s a lie would depend on their circumstances, which is why a one size fits all approach is flawed. I’ve been in debt and for a long time I was making combined minimum payments of £735.00 on 3 credit cards and paying more in interest than I was knocking off the balance every month. But I kept the payments at £735.00 even when the minimum the companies asked for changed and gradually the balance went down and with it the interest. So I’ll be debt free by next autumn, but that will be ten and a half years from my LBM.

Under these new regulations the longest I would get to repay my debts would be seven years, 36 months plus four years on a repayment plan. I couldn’t have done it in seven years and to be forced to do so when I’d never missed a payment and hadn’t breached my credit agreement would have caused me a lot of anger and stress.

Yes, I know that there is a freezing interests and charges option for people who can’t pay and I might well have fallen into that category, but my point is that I could and have paid I just needed enough time to do it. And the sense of anticipation and achievement I have looking forward to September 2018 is far greater than it would have been if I’d been forced into an unwanted debt remedy.

Then there are the people for whom ‘I’m not in debt’ is the truth. Yes, they have a debt, a credit card on which they’re making minimum payments and paying considerable amounts in interest, but their overall financial situation may be fine. Especially when you take into account that the new rules will apply to any credit card balances over £200.00 and that there is no opt out clause for people who could pay more, but choose not to do so.

I think that FCA proposals are good overall for people who want and need to engage with them, but without an opt out clause it’s always going to be a double-edged sword.