Persistent debt
We can help you understand persistent debt and how you could reduce the cost of your credit.
What is persistent debt?
- The Financial Conduct Authority (FCA) defines persistent debt as when you are paying more in interest, fees and charges than you are paying off your credit or store card balance, over a period of 18 months or longer.
- It might take several years to repay the balance if you don't increase your payments. This could cost you more in interest and fees.
- Persistent debt applies to credit or store cards because your payments can be fairly flexible.
How to save money on your credit card debt
By using the repayment calculator, you can see how long it'll take to repay your credit card balance. The length of time it’ll take, will depend on the amount you pay off each month.
It will also show you how much you could save in interest charges by increasing your monthly payment a little each month.
Before you start, you’ll need:
- your credit card account balance
- the interest rate being charged
- the amount you can afford to pay each month.
The repayment calculator will work out the total interest to pay and the total cost of the credit borrowed.
It will also show you how long it’ll take to pay off your balance.
Repayment calculator
Check how the amount you pay each month affects the time it takes to pay off your balance. Paying your balance off quickly can reduce the amount of interest you’ll pay.
Paying more will help reduce the cost of your credit
Your monthly credit card statements include a minimum payment amount. You need to make this payment on time to avoid fees or losing any promotional interest rates and stop any damage to your credit score.
If you've paid more in interest, fees, and charges than on your balance for 36 months, we can help you. We can explore various ways to help you clear your balance. This might include stopping your card or lowering your credit limit.
Here’s a simple example of how it works, based on a balance of £3,000. This is based on an effective interest rate of 24%.
This example assumes that you don’t use your credit card, there are no extra fees or charges, and the interest rate doesn’t change.
The recommended monthly payment is 1% of the balance owed, plus standard interest, fees and charges.
Avoiding getting into persistent debt
A direct debit will make sure your payments are made on time. You can set this up for a minimum payment, a fixed amount or a full payment amount.
If you pay more than the minimum amount, your balance will reduce quicker and help you avoid being in persistent debt.
How we can help
We are committed to helping you to pay off your credit card balance in a reasonable time frame.
If we think you are in persistent debt, we will:
- get in touch and offer you practical advice
- update you regularly so you can track your progress
- connect you with our specially trained colleagues to answer any questions you may have
- help you work out how much you can afford to pay each month
- get you set up with a direct debit.
Recommended payment amount
If you've been in persistent debt for over three years, it will help if you pay more than the minimum needed as it will help reduce your balance faster.
Think about setting up a direct debit for the recommended payment amount and avoid extra interest charges. This amount is calculated to help you clear your balance in about four years.
It’s easy to set up a direct debit for the recommended payment amount using online services or the MBNA mobile app:
- select the three dots in the top corner of your credit card account
- select 'Manage direct debit'.
If we have your mobile number, we’ll tell you what the recommended payment amount is by a monthly SMS.
If you don’t want to pay by direct debit, you can make payments in other ways.
Get started online
Frequently asked questions
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If you have paid more interest, fees and charges than off the balance, over 18 months or longer, we’ll write to you.
We’ll include information and tips on how to repay your balance sooner to reduce your borrowing costs.
We'll send you a monthly text message if we believe you can afford it and have your mobile number. This message will suggest a payment amount. You can select to repay the suggested amount. Doing this will help you get out of persistent debt.
In nine months, we'll check back with you to see how you’re getting on. We’ll give you an update on whether you are paying off more of your balance than the interest, fees, and charges owed.
We’ll check your account 18 months after your first persistent debt letter and let you know if you're still in persistent debt.
We'll give you a recommended payment amount for you to repay each month. This way, you could clear your balance in about four years and pay less interest.
You'll still receive your monthly statement. This statement will show the recommended payment amount. It will include your minimum payment and any overdue payments. The statement will also account for any transactions you make with your card. Making extra transactions will increase the recommended payment amount.
We’ll write to you every year for four years and let you know how you are doing on your persistent debt journey.
You may also get extra reminders and tips in addition to these letters. If we have your mobile number, you'll receive a monthly text message. This message will tell you how much you need to pay each month to avoid long-term debt within four years.
Any action we take is aimed at helping you to cut your borrowing costs and repay your balance more quickly.
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If your account has been in persistent debt for 18 months, a suggested payment amount will start to feature on your monthly statements. This is the amount you can choose to repay to help get you out of persistent debt.
If you do not pay the suggested payment amount each month, when you have been in persistent debt for 3 years, a recommended payment amount will start to feature on your monthly statements instead. The recommended payment amount is the amount you can choose to repay to help you get out of persistent debt by the end of your 4-year paydown plan. The recommended payment will include your minimum payment, any overdue payments, and will consider if you still use the card.
Both the suggested payment amount and the recommended payment amount can vary each month and by paying this amount each month, it will help you to repay your balance more quickly.
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If your account has been in persistent debt for three years or more, we may stop your card. This will happen if you miss the recommended monthly payments.
We take this step to help you pay off your balance and make progress.
If we stop your card, we’ll close your account after you've cleared your balance.
Let us know if you need your credit card for essential living expenses, and we’ll find a way to help you.
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Being in persistent debt won't directly affect your credit score. But we may lower the amount you can spend to help you manage your debt. This change will prevent your balance from getting too high.
It could also affect your credit score indirectly along with things like your repayment history and carrying a high debt balance.
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If you are worried about your money, we have help and support on our money worries page.