What IS persistent debt?

DestinedtobePoor

I have a relatively small debt with Barclaycard (small compared to what I owe on a couple of other credit cards) my current balance is £2508
Until May 2019 I was paying only the minimum payment - so usually around £45 a month with interest of around £39 a month.  I can see why that might be considered as being in persistent debt - but, the interest on my Barclaycard debt was much less than on the other two cards, so I was paying more on those..  at that point Barclaycard started to give a *recommended* payment amount of £75.00.  I did a few calculations and found it was affordable (just) so I changed my Direct Debit to be £75.00 per month.

From June 2019 until December 2019 - I paid £75.00 per month - £525 in total - the interest per month ranged from £33 to £40 for those 6 months.
After my December payment I got my first text message about persistent debt and they asked me to pay £150 in January - which I did.  I changed my DD to £150 per month.  Just before that payment was taken - my DD date is 20th, text arrived on £18th which said I needed to pay at least £200 in February to not be considered to be in persistent debt.  January's payment of £150 was paid and the interested added was £33.99 and I then changed my DD to be £200.  On the 18th of February, 2 days before my DD went out - I got a text saying my personalised monthly payment was now £241 and it needed to be paid by 26/02/20 - it was too late to change my DD at this point and besides, I really didn't have an extra £41 until after pay day on 28th Feb (tomorrow).  My Barclaycard account shows my payment of £200 was received.. interest added is £31.44

Today, I have received another text saying "Hello. We wanted to let you know that your account has been in persistent debt for at least 36 months. For now we haven't suspended your card and we'll be in touch again with a plan to help you repay your balance. There is no need to get in touch in the meantime"

OK - so what exactly IS persistent debt?  For the last 9 months I have paid them EXACTLY what they have asked for.  Yet they are still harassing me.  I am planning on leaving my Direct Debit at £200 a month and that's all I can afford.  I am just worried their "PLAN" is going to be higher than that and I am going to end up payment more interest on my other debts which are higher priority because of their higher interest rate.

Willing2Learn

Under the FCA’s definition, credit card customers are in persistent debt if they have paid more in interest and charges than they have repaid of their borrowing, over an eighteen month period.  The good news is that a few weeks ago, the FCA wrote to credit card firms telling them to review their approach to borrowers who are stuck in persistent debt.

FCA wants credit card firms to review their procedures.  This includes

• a concern that customers may not respond to letters from their credit card provider, advising that they have been in persistent debt for three years. Firms must encourage customers to speak with them to discuss potential repayment arrangements. If customers can’t afford the options proposed by the firm, they must be treated with forbearance and due consideration, for example, by reducing, waiving or cancelling any interest or charges.
• a concern that firms may cancel or suspend credit cards for everyone in persistent debt, including those willing to engage and come to an agreement. In these circumstances, firms are not allowed to suspend a credit card without having an objectively justifiable reason.

This does not help you right now though.  Is there any way you can increase your income or reduce your expenses while you pay down your debts?

If you want additional advice regarding your finances, then I recommend you post up your SOA.  Maybe we can help you to balance out your monthly budget.

Elisheba

Is this quite a serious thing then?  What can they actually do if you are making minimum or above payments every month? I think I have had a couple of these letters, but I just ignored them.  I've never missed a payment, and I pay slightly more than minimum on all the credit cards these days.  I have a plan (in my head) to get everything paid off in the next 3 years (touch wood, fingers crossed, etc, etc), so I just figured it was them doing something they had been told to and wasn't very relevant to me.

clairebeth

Would you be able to do a balance transfer to a card with cheaper (preferably 0%) interest? Then you could pay it off quicker and also not be deemed as being in persistent debt?

[Deleted User]

I called up Aqua as I am one of the first of hundreds going through it, after confirming they are my only unsecured creditor, they actually said I have another 27 months to pay back in full when asked and didn't have to make the recommended scary booster payments per letter. I'm not bothered by it but can let you know how my credit file pans out? I'm of the mindset everytime you phone them there maybe a different explanation so not to sweat it.
They gave me some tips for the future. I get they really don't want to make a defaulting customer really if they don't have to just coz the FCA thinks so.

Sharon87

Are you able to apply for a 0% or low interest credit card? It'll be a lot cheaper for you to do it. Maybe it's the nudge you've needed to try and shop around for cheaper cards.

If you don't get accepted for cheaper cards and Barclaycard do action it further, then an option Barclaycard can do is to suspend your card and freeze interest, helping you pay off your card quicker, but it will negatively affect your credit rating.

I got the letters through about the persistent debt but they've not actioned anything because my cards are on 0% or 3.9% so I pay very little interest.

A_Lert

Find out what your actual minimum payment is. Your card provider is obliged to contact you about persistent debt but they cannot demand you repay more than the minimum - though some providers have been amending their terms to increase said minimum. They can suspend your card so you can't borrow any more.

Next time you speak to Barclaycard, tell them you have other debts at higher interest rates and the payments they're asking from you just aren't affordable. Also ask them to explain on what basis, when you were making payments of £150/month and paying interest of £32/month, Barclaycard are claiming you're still in persistent debt?!