The best steps to deal with a Persistent Debt Letter

Reidy100

Hi, I have an cc limit of 8000 the interest rate is 44.83% My contractual minimum payment is 351.05 I havnt had a letter yet, but more of a warning letter re i might be getting near persistent debt. The last statement has a note on it saying " We may be adding a Recommended Extra Payment to your statement"

I have never missed a payment so I want to be in control of the situation

Step wise I was thinking of the order i should next take action on, please let me know if i have missed any steps or if you can think of additional steps thanks.

So step

1. cancel the card not the account.
2. request a reduction or removal of interest rate
3. Pay the o/s balance at 332 per month to pay off the balance in 24 months if interest rate removed.

Now I have heard of get the debt reduced or written off which i fear may have strings attached re credit rating etc.

Any steps i have missed ? or other things to try, let me know.

TIA for any help given

Reidy

eskbanker

1 - cancelling the card would only help if you're still spending on it, but if you've maxed it out then this presumably doesn't apply?

2 - no harm in asking, but don't get your hopes up.

3 - hypothetical and very unlikely.

Debt can sometimes be partially written off but only where the account has already defaulted and your credit status has already been trashed accordingly - if you're keeping up with repayments then there's less reason for them to make any offers.

At the risk of stating the obvious, the best step would be to increase your monthly repayments - how much room for manoeuvre do you have for that?

HillStreetBlues

Have you looked at a balance transfer card? as that could give you number 3

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81925561#Comment_81925561

Good point - refinancing debt is an excellent way of reducing interest burden! It may be a stretch to be able to get all £8K onto one or more 0% cards, but anything that reduces the overall monthly repayments has to be worth a try, if done without causing too much damage by making too many credit applications…

Reidy100

https://forums.moneysavingexpert.com/discussion/comment/81925537#Comment_81925537

I would say only about £50-£70 at a stretch but i dont want to over stretch tbh

Reidy100

I looked at nought percent cards but got nowhere but not balance transfer, i will take a look

Reidy100

If I pay extra in during the month it gets taken off the payment and not the the balance.

Reidy100

https://forums.moneysavingexpert.com/discussion/comment/81925561#Comment_81925561

On here the only balance transfer is a 0% balance transfer not sure i would get that .

Isthisforreal99

Worth noting that any deviation from the contractual terms is likely to lead to an arrangement to pay marker on your credit file meaning future credit will be difficult to get.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81926497#Comment_81926497

You're maybe misunderstanding - if your contractual minimum repayment is, say, £350, and you make an extra repayment of £50 (before the due date) then I'd expect it to show a lower remaining minimum, but if you still pay £400 in total then the extra £50 will reduce your outstanding balance by that extra £50 (in the same way it would if you repaid the £400 in one go rather than two), so nothing goes missing if that's how you're seeing it!

Extra repayments will definitely (a) help you reduce the debt and (b) reduce the chances of persistent debt action.

ManyWays

44% is a very high interest rate to have, especially on a card with such a large limit. Do you have a lot of other debt as well?

Reductions in interest rates seem to happen in the States, but not in the UK, there is no point in asking for one. Here you can get interest frozen if you are in financial difficulty, but many lenders expect you to have missed at least one payment before they will set up a payment arrangement with interest frozen. And a payment arrangement will hurt your credit record.

You would normally only get the debt written off if you can only make tiny payments to it, for example if you have mental heath or physical problem that will prevent you working. If you can afford anything like £300 a month, there is no chance this will happen (NB there are exceptions like economic abuse, but they are very rare).

You could look at making an affordability complaint about the debt.
You could look at your options for tackling all of your debts.
You could look at paying more to the card if this is affordable AND it will not mean that you have to use this or other credit cards more.

If you move over to the Debt Free Wannabe board https://forums.moneysavingexpert.com/categories/debt-free-wannabe
that is a good place to talk about these and other options in more detail.