Persistent Debt Letters: What They Mean and What Lenders May Do

This guide explains how the UK persistent debt system works. It does not constitute financial advice.

If you hold a credit card or store card in the UK and have been making payments — but those payments have mostly gone towards interest and charges rather than reducing what you actually owe — your lender is required by regulation to write to you about it. These communications are commonly known as "persistent debt letters."

The persistent debt framework is a set of rules created by the Financial Conduct Authority (FCA) following its Credit Card Market Study. The rules are contained in the FCA's Consumer Credit sourcebook (CONC), specifically CONC 6.7.27R onwards. They came into force on 1 March 2018, with full compliance required by 1 September 2018. The FCA later extended the framework beyond credit cards to other forms of retail revolving credit (for example, some store card and catalogue-style revolving credit), with implementation dates varying by product and firm.

The purpose of the framework is to ensure that credit card and retail revolving credit providers identify customers who are paying more in interest, fees, and charges than they are repaying in actual borrowing, and then take structured steps to address that situation over defined time periods.

Persistent debt is a specific regulatory term. It means that, over a rolling 18-month period, a customer has paid more in interest, fees, and charges combined than they have repaid of the principal (repayment of the amount borrowed), excluding interest, fees and charges.

If a customer meets this definition, the lender must follow a structured sequence of communications and, eventually, interventions. There are three key stages: an initial letter at 18 months, a reminder at around 27 months, and a formal intervention at 36 months. At the 36-month stage, the lender must take reasonable steps to help the customer repay their balance more quickly, and if the customer does not respond or refuses to engage, the lender may suspend or cancel the credit facility.

These rules apply across the UK — England, Wales, Scotland, and Northern Ireland — to credit cards and retail revolving credit accounts.

The persistent debt system operates as a staged process. Lenders are required to monitor accounts on a rolling basis, and the regulatory obligations escalate over time if the customer's payment pattern does not change.

The core definition

A customer is in persistent debt when, over the immediately preceding 18-month period, the total amount they have paid in interest, fees, and charges exceeds the total amount they have repaid towards the principal.

Firms must monitor accounts on an ongoing basis and apply the rules when the relevant thresholds are met.

The staged intervention process

The framework follows a clear sequence. After 18 months of persistent debt, the lender must send a first communication explaining the situation, encouraging the customer to increase payments, and providing contact details for not-for-profit debt advice services. If the customer remains likely to be in persistent debt at 36 months, a further communication is required around the 27–28 month point if the customer is likely to remain in persistent debt at 36 months, in line with the FCA's timing rules. If the customer has been in persistent debt for two consecutive 18-month periods (36 months in total), the lender must actively intervene by contacting the customer with specific options to repay the balance more quickly.

If, at the 36-month stage, the customer does not respond or states they will not increase their payments despite the proposed options being sustainable, the lender is generally required to suspend or cancel use of the credit card or retail revolving credit facility, subject to the FCA rules and any applicable exceptions (including where suspension would cause significant adverse impact). Where the customer confirms that the proposed repayment options would be unsustainable for them, the lender must instead treat the customer with forbearance and due consideration.

The £200 balance threshold

The persistent debt rules do not apply where the balance on the credit card or retail revolving credit account falls below the FCA's de-minimis balance threshold (commonly £200) during the relevant period. This threshold ensures that customers who have paid off all or almost all of their balance are not captured by the framework.

The 18-month communication

At the 18-month mark, the lender must send a communication in plain language that notifies the customer they are in persistent debt, explains the benefits of increasing payments, encourages the customer to make contact to discuss their circumstances, warns of potential implications if persistent debt continues, and provides contact details for not-for-profit debt advice organisations. The firm has discretion over the language and tone, and the communication must be delivered through an appropriate medium having regard to the customer's preferences.

The 27-month reminder

Around the 27–28 month point, the lender must reassess the customer's situation. If analysis indicates the customer is likely to remain in persistent debt at 36 months, the lender must repeat the 18-month communication steps, in line with the FCA's timing rules. The firm must consider the customer's payment patterns and assume they will be representative of the next 18-month period. This reminder does not apply if the firm is already taking steps equivalent to, or more favourable than, the forbearance requirements under CONC 6.7.37R.

The 36-month intervention

Where the customer has been in persistent debt for two consecutive 18-month periods — a total of 36 months — the lender must take reasonable steps to assist the customer in repaying their balance more quickly, without adversely affecting the customer's financial situation. The lender must contact the customer to explain the benefits of increasing payments, provide debt advice contact details, set out specific payment increase options, request a response within a specified reasonable period, and inform the customer that their card may be suspended if they do not respond.

The options presented may include increased monthly payments or a balance transfer to a fixed-sum unsecured personal loan. Published FCA guidance indicates that a "reasonable period" for repaying the balance under these options is expected to be 3 to 4 years. Only in exceptional circumstances should this period extend beyond 4 years, and only if doing so involves no additional cost to the customer. Even in exceptional cases, the extension should not be significant.

Card suspension or cancellation

If the customer does not respond within the specified period, or confirms the proposed options are sustainable but states they will not make increased payments, the firm is generally required to suspend or cancel use of the credit card or retail revolving credit facility, subject to the FCA rules and any applicable exceptions (including where suspension would cause significant adverse impact). Any suspension or cancellation must follow the agreement terms and applicable consumer credit notice requirements, and firms must act fairly and in line with FCA rules.

Forbearance

Where the customer confirms the proposed repayment options are unsustainable, or where payment patterns indicate the customer is unlikely to repay within a reasonable period, the lender must treat the customer with forbearance and due consideration. Forbearance may include reducing, waiving, or cancelling interest, fees, or charges. The FCA's expectation is that the credit card will generally be suspended where forbearance is offered, unless doing so would cause significant adverse impact on the customer's financial situation.

"Persistent debt" does not mean you are in arrears or in default. Persistent debt is a separate concept from missed payments. A customer can be making every minimum payment on time, every month, and still meet the persistent debt definition. The issue is not whether payments are being made, but what proportion of those payments is going towards reducing the actual amount borrowed versus covering interest and charges.

The principal does not include added interest or charges. The principal refers to repayment of the amount borrowed, excluding interest, fees and charges. Amounts that have been added to the account balance as interest, fees, or charges do not count as principal for the purposes of the persistent debt calculation.

The £200 threshold is not a minimum debt amount for the rules to apply. The threshold works by excluding accounts where the balance falls below the FCA's de-minimis level (commonly £200) during the relevant period. It is not a standing balance test at a single point in time.

Receiving a persistent debt letter does not mean the lender is about to close your account. The 18-month letter is informational and encouraging. It is only at the 36-month intervention stage — and only where a customer does not respond or refuses to engage — that suspension or cancellation becomes a regulatory requirement.

Store cards and catalogue credit accounts are covered, not just credit cards. The rules initially applied to credit cards from March 2018. The FCA subsequently extended them to retail revolving credit, including store cards and catalogue accounts, as confirmed in the FCA's Annual Report 2019/20.

Business credit cards Credit cards promoted solely for business purposes are excluded from the persistent debt rules. However, personal credit cards used for business purposes remain subject to the rules if the underlying agreement is a regulated credit agreement.

Customers already receiving forbearance The persistent debt communication requirements do not apply where a firm is already taking steps to treat the customer with forbearance under CONC 6.7.37R, or is taking steps that are equivalent to or more favourable than those forbearance requirements. In such cases, the firm must continue taking those steps.

Essential living expenses and card suspension The general FCA expectation is that a credit card should be suspended where forbearance is being offered. However, this expectation does not apply where suspension would cause significant adverse impact on the customer's financial situation — for example, where the customer is dependent on the card for essential living expenses. The FCA's guidance identifies essential living expenses as including mortgage payments, rent, council tax, food bills, and utility bills. Essential items that may justify continued card access include school uniform, baby essentials, and essential household appliances such as a refrigerator.

COVID-19 payment deferrals FCA COVID-19 guidance affected how persistent debt was assessed and communicated for customers with payment deferrals, and firms applied adjustments during the deferral period. The persistent debt provisions restarted after the deferral ended.

The persistent debt framework creates a regulatory timeline that lenders must follow. At 18 months, the lender's obligation is limited to communication — informing the customer of the situation and encouraging them to consider increasing payments. At 27 months, if the customer appears likely to remain in persistent debt, the lender must communicate again. At 36 months, the obligation shifts from communication to intervention, and the lender must present specific options for repaying the balance more quickly.

The 36-month stage is where the most significant practical consequences arise. The customer is presented with repayment options — which may include higher monthly payments or transferring the balance to a fixed-term personal loan — and is given a specified period to respond. If the customer does not respond or declines to increase payments despite the options being sustainable, the lender is generally required to suspend or cancel the credit facility, subject to the FCA rules and any applicable exceptions (including where suspension would cause significant adverse impact). If the options would genuinely be unsustainable for the customer, the lender must instead offer forbearance, which may include reducing or waiving interest and charges.

The staged intervention process is designed to interrupt a pattern where payments predominantly service interest and charges rather than reducing the underlying balance.

What is persistent debt? Persistent debt is a regulatory definition. It applies where, over a rolling 18-month period, a customer has paid more in interest, fees, and charges than they have repaid of the principal (repayment of the amount borrowed), excluding interest, fees and charges, on a credit card or retail revolving credit account.

Does persistent debt mean I have missed payments? No. Persistent debt is unrelated to arrears or defaults. A customer can be meeting every minimum payment obligation and still be in persistent debt. The definition focuses on what proportion of payments goes towards reducing the borrowed amount versus covering interest and charges.

What products are covered by the persistent debt rules? The rules apply to credit cards and retail revolving credit, which includes store cards and catalogue credit accounts. Business credit cards promoted solely for business purposes are excluded.

What happens at the 18-month stage? The lender must send a communication in plain language explaining that the customer is in persistent debt, outlining the benefits of increasing payments, encouraging contact to discuss circumstances, warning of potential consequences if the situation continues, and providing details of not-for-profit debt advice services.

What happens at the 27-month stage? If the lender's analysis indicates the customer is likely to still be in persistent debt at 36 months, a further communication is required around the 27–28 month point, in line with the FCA's timing rules.

What happens at the 36-month stage? The lender must take reasonable steps to help the customer repay more quickly. This includes setting out specific payment increase options, providing debt advice contacts, and informing the customer that the card may be suspended if they do not respond within a specified period.

Can the lender suspend or cancel my credit card? At the 36-month stage, if the customer does not respond within the specified period, or confirms the proposed options are sustainable but states they will not increase payments, the lender is generally required to suspend or cancel use of the credit facility, subject to the FCA rules and any applicable exceptions (including where suspension would cause significant adverse impact). Any suspension or cancellation must follow the agreement terms and applicable consumer credit notice requirements, and firms must act fairly and in line with FCA rules.

What if I cannot afford the repayment options offered? Where the customer confirms the proposed options would be unsustainable, or payment patterns indicate repayment within a reasonable period is unlikely, the lender must treat the customer with forbearance and due consideration. This may include reducing, waiving, or cancelling interest, fees, or charges.

Is there a minimum balance for the rules to apply? The persistent debt rules do not apply where the account balance falls below the FCA's de-minimis balance threshold (commonly £200) during the relevant period.

How long should the repayment plan last at the 36-month stage? Published FCA guidance indicates that a reasonable repayment period is 3 to 4 years. Only in exceptional circumstances should this extend beyond 4 years, and only if there is no additional cost to the customer.

Were the rules affected by COVID-19? FCA COVID-19 guidance affected how persistent debt was assessed and communicated for customers with payment deferrals, and firms applied adjustments during the deferral period. The provisions restarted after the deferral ended.

• Persistent debt is a specific FCA-defined term that applies when a credit card or retail revolving credit customer pays more in interest, fees, and charges than in principal repayment over an 18-month period. The rules are set out in CONC 6.7.27R onwards and apply across the UK.
• The framework operates on a staged timeline: an informational letter at 18 months, a reminder at approximately 27 months, and a formal intervention at 36 months. The 36-month intervention requires the lender to offer specific repayment options and may result in suspension or cancellation of the credit facility if the customer does not respond or declines to adjust payments.
• Accounts where the balance falls below the FCA's de-minimis threshold (commonly £200) during the relevant period are excluded. Business credit cards promoted solely for business use are also excluded. Customers already receiving forbearance treatment are not subject to the communication requirements provided the firm continues those steps.
• Where repayment options would be unsustainable for the customer, the lender must offer forbearance rather than suspend the account. In cases where suspension would cause significant adverse impact — for example, dependence on the card for essential living expenses — the general expectation of suspension does not apply.

Related: What Happens Before Your Card Is Restricted | [Moving to 0% Without Making It Worse](/guide/how-to-move-credit-card-debt-to-0-percent-without-making-it-worse) | [Debt Management Plans: Your Rights](/guide/debt-management-plans-what-creditors-can-and-cant-do).