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Carrying a balance on your credit card can sometimes feel unavoidable, especially during financially challenging times. Credit cards allow flexibility in managing finances but can also lead to persistent credit card debt when not managed carefully.

What is persistent credit card debt?

If over an 18-month period, you end up paying more in interest, fees, and charges than you have paid off your credit card balance, this would be classed as persistent debt. Under these circumstances, your credit card provider is required to notify you and offer you help.

The aim is to prevent the debt from growing further and becoming unmanageable, which could have a severe impact on your financial health.

Persistent credit card debt usually happens when only minimum payments are made, covering just the interest and fees, barely reducing the outstanding balance. It’s considered a sign of financial distress and addressing it should be a priority to avoid further financial complications and potential impacts on your credit score.

What happens if you don’t address persistent credit card debt?

If you don’t address persistent credit card debt, several outcomes may follow. Initially, your credit card issuer could suspend your card, making it unusable. They may also suggest a repayment plan to help clear the debt, which could involve higher monthly payments or an extended payment term.

Interest rates may also be increased and you may be hit with additional fees, further exacerbating the debt.

In extreme cases, the issuer may transfer the debt to a Debt Collection Agency (DCA), which will take steps to recover the funds owed. It’s important to contact your credit card provider as soon as possible so that they can discuss your options with you.

Your credit card company may then be able to help you with a plan to pay off your outstanding credit card balance in a reasonable amount of time.

Does persistent credit card debt affect your credit score?

Yes, it can have a big impact. If you owe a lot of money on your credit cards compared to how much you’re allowed to borrow, it can look bad to companies that check your credit. This is called your credit utilisation rate, and it’s better to keep it low, ideally under 30%. This shows you’re not too dependent on borrowing money.

If your debt leads to you missing payments or not paying at all, this will also lower your credit score. So, it’s important to deal with any debt issues quickly. To reduce your credit utilisation rate, you can try to pay off your debt faster. You could also ask for a higher credit limit or get another credit card, but make sure not to spend more money just because you can. It might also be worth spreading out what you owe across several cards, so none of them are too maxed out.

Credit card persistent debt help

Managing debts can be overwhelming, but there are ways to get help and advice with your credit card debt.

If you qualify, you may have the option to transfer your credit card balance to another card that has a lower interest rate or offers an introductory period with 0% interest. This could reduce the amount you pay on your existing debt.

However, be aware that most credit card providers charge a fee for balance transfers. It’s also important to consider the duration of the introductory interest-free period.

Can persistent credit card debt be written off?

Persistent credit card debt is not typically written off. However, there are some circumstances where debt might be reduced or written off if you qualify for a debt solution.

If you find yourself unable to repay your debt, it could be worth speaking with a professional debt advisor to discuss all available debt solutions which can be tailored to your specific financial situation, such as an Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP).

For free debt advice, you can contact MoneyHelper or for expert personalised debt advice, you can speak with our friendly team today.