Card company keeping me in persistent debt!

Bek12

Hi,
I've had a credit card for a number of years and over this time there are several occasions where I've made additional payments, sometimes of a couple hundred pounds, to reduce my balance quicker (yes I'm aware I should be paying off in full each month but can't). The company are always bleating on about me being in persistent debt and encouraging me to make boosted payments so that's what I've tried to do. Anyway... I've thought to myself that all these additional payment don't seem to have made a difference and when I've looked in to it... each time I've made an additional payment, my monthly direct debit has been amended to £0 and they've not taken my normal payment. So effectively I've not been paying off much extra and they've been keeping me in persistent debt rather than allowing me to reduce my balance quicker.

Can they do this? Am I able to complain?
Appreciate any advice.
Kindest regards

[Deleted User]

You can complain about anything you want.

But if the manual payments are reducing your DD, simply make a larger manual payment, or ask for the DD to be set at a higher level. Then they won't bleat about your persistent debt any more.

fatbelly

'Persistent debt' was a set of rules that came in in Sept 2018 with letters going out after 18 months. It was expected to be a  major issue and we were planning press releases and media interviews.

Fast-forward 18 months and you know what happened.in March 2020. So this issue has been largely eclipsed.

There is a factsheet here

https://nationaldebtline.org/fact-sheet-library/persistent-debt-ew/

It could be that you are approaching the 36 month point and so really need to have  chat with their 'Persistent debt' department about an interest-free strategy. You should have another card ready to use as this one may well get suspended. 

Debt Camel has a good article here

https://debtcamel.co.uk/credit-card-pay-more/

MEM62

Bek12 said:

each time I've made an additional payment, my monthly direct debit has been amended to £0 and they've not taken my normal payment. 

All my cards work this way.  It is quite normal.  Any additional payment reduces or cancels the DD amount.  If you want to reduce the balance this way, when you make the extra payment you need to pay the additional amount plus the minimum payment. 

Brie

Some cards have the option to have a minimum payment always taken.  I would suggest you see if this is possible for you. 

The other thing is to time when you make manual payments.  If you make one just after a DD has been taken but before the next statement then you should be fine as the statement will then show the next DD to be taken.  You also might be ok if you make one a day or 2 before the DD as the DD will already be processing.  It may be that you find that if you move your DD date (which will likely mean a change of statement date as well) making the manual payments are easier for you due to matching better when you get paid.  

Brie

MEM62 said:

All my cards work this way.  It is quite normal.  Any additional payment reduces or cancels the DD amount.  If you want to reduce the balance this way, when you make the extra payment you need to pay the additional amount plus the minimum payment. 

It works this way on Santander but not MBNA or M&S.  

Aran76

You can get around this by making the additional payments after your usual payment has been taken but before the next statement is produced.

peteuk

Sorry to say I dont see the Credit Card company keeping you in debt.  All credit cards give you the option of a minimal % payment, a set figure or full payment. 

Your in control of what is on the credit card and how you pay it back.  So if for 10 months your paying the minimal on it and then your making additional payments.  As someone has already stated if you make an additional payment sometime it zero’s the next months DD.  Sometimes if you pay your monthly payment early, the company the take it as an extra payment rather than an early monthly payment.  

Take the bull by the horns and speak to them, see if they can help.

MalMonroe

Hi, I was in a similar position a few years ago before I really crashed and ended up having a DRO. However, that needn't happen to you. I was in dire financial straits in 2013 and my creditors were writing to me then about 'persistent debt'. When you say "The company are always bleating on about me being in persistent debt and encouraging me to make boosted payments so that's what I've tried to do" - that is just what was happening to me. Except I had about 5 or 6 credit cards and even though I also had a really good job and income, I had too many credit cards so was unable to pay them off. I buried my head in the sand. But of course the problems didn't go away.

Is there any way that you could apply for a 0% balance transfer credit card?  By first doing a 'soft search' first of course. 

The problem is that you are trying to lower the balance on your card but interest is being added so whatever you are paying off isn't really helping. Especially if it's just the minimum payment. 

If you could get a 0% card for a few months you could try to pay off as much as possible with all of the payment going to reduce the balance of the card and none to pay interest. 

The best thing I ever did was to contact Stepchange. There are three recommended free debt help agencies in the UK - National Debtline, Citizens Advice and Stepchange. I always recommend Stepchange because as far as I'm concerned they saved my life. They are non-judgemental, kind and knowledgeable. Please give them a call, even if it's just to chat about your finances - you're under no obligation to take any advice at all.

https://www.stepchange.org/    Tel: 0800 138 1111

This is what they say about persistent debt - https://www.stepchange.org/debt-info/persistent-credit-card-debt.aspx

Credit card companies are not only allowed to write to people with persistent debt, they are encouraged to do so. Believe it or not, it's meant to be helpful. Though I know it doesn't seem like it - I've been in that same situation myself. 

Hope this helps, if not please do ignore.  Good luck, though. 

BadDebtor

Bek12 said:

Hi,
I've had a credit card for a number of years and over this time there are several occasions where I've made additional payments, sometimes of a couple hundred pounds, to reduce my balance quicker (yes I'm aware I should be paying off in full each month but can't). The company are always bleating on about me being in persistent debt and encouraging me to make boosted payments so that's what I've tried to do. Anyway... I've thought to myself that all these additional payment don't seem to have made a difference and when I've looked in to it... each time I've made an additional payment, my monthly direct debit has been amended to £0 and they've not taken my normal payment. So effectively I've not been paying off much extra and they've been keeping me in persistent debt rather than allowing me to reduce my balance quicker.

Can they do this? Am I able to complain?
Appreciate any advice.
Kindest regards

Regardless of what they say, their goal is to put you in their sweetspot, where you can only afford to service the debt not pay it off.

if you stuck the numbers in a speadsheet and saw the interest costs of 10, 15 or 20 years you would NEVER get one 

Somehow you have to find a way to pay serious amounts towards this debt.  Leave the DD in place but setup a standing order for a higher amount and just accept they will zero the DD, you can cancel the Standing Order at any time and the DD will kick in as required.

They did it, you can complain but as an adult you are expected to be aware of your finances.  I am guessing you spend the money that was not taken, but if not pay it over and setup that standing order.

I do agree with you that it is keeping you in persistent debt but what is worse is they did not have to save money to lend you, they just invent it on their computer and can charge you up to 39.9%  per annum

kimwp

Aran76 said:

You can get around this by making the additional payments after your usual payment has been taken but before the next statement is produced.

Exactly this. When a statement is produced, it's basically a bill from the bank and any money that they receive, they will take to pay off that bill, reducing the bill by the direct debit date so the total you pay is the amount you agreed with them eg the minimum, the full amount etc.

If you want to keep your current regular amounts, then there are a few options, best in my opinion are to do as above and put the additional amount in after your DD date but before your bill date or put the addition couple of hundred in whenever but check the amount that goes out on your DD and make a manual payment if the amount is less than usual. 

It must be really annoying that you've been caught out by this, but it's a pretty standard thing with credit cards.