Got a Persistent Debt Letter: What Happens Before Your Card Is Restricted

If you have received a letter from your credit card provider about "persistent debt," you are not alone, and the letter does not mean you have missed any payments or done anything wrong. These letters are part of a regulatory process introduced by the Financial Conduct Authority (FCA) in 2018. The FCA requires credit card providers to contact customers who have been paying more in interest, fees, and charges than they have been repaying of the amount they actually borrowed. The rules exist to help customers avoid paying significantly more than they originally spent on their credit card.

This guide explains what persistent debt means under UK regulations, what the letters contain, what the timelines are, and what can happen at each stage — including when a card may be suspended or cancelled.

Persistent debt is a formal regulatory term. It means that over an 18-month period, you have paid more in interest, fees, and charges on your credit card than you have repaid of the original balance (the principal). This definition comes directly from FCA rules in the Consumer Credit sourcebook (CONC 6.7).

The FCA requires your card provider to contact you at specific intervals: first at 18 months, again at around 27 months, and a third time at 36 months. At each stage, the communications become more detailed. If you are still in persistent debt at the 36-month point and do not engage with your provider's communication, or if you confirm that you can afford to increase payments but state that you will not do so, the firm is generally expected to restrict use of the card, subject to exceptions and forbearance considerations.

The rules can apply to running-account credit products such as credit cards and similar retail credit accounts, depending on how the product is regulated. A de-minimis threshold applies (around £200) below which the persistent debt intervention does not apply.

The persistent debt framework operates as a staged intervention process. It is set out in the FCA's Consumer Credit sourcebook (CONC), within the provisions of CONC 6.7 dealing with persistent debt. The rules came into force on 1 March 2018, with firms required to achieve full compliance by 1 September 2018.

The FCA has statutory rule-making power under the Financial Services and Markets Act 2000 (sections 137A, 137T, and 139A) to establish these rules. This means they are binding on all UK credit card providers regulated by the FCA.

The system works as follows. Credit card providers must monitor accounts for persistent debt on an ongoing basis in line with FCA rules. If a customer's payments over any rolling 18-month period show that more has gone toward interest, fees, and charges than toward reducing the principal balance, the customer is classified as being in persistent debt.

Once that classification is triggered, a structured sequence of mandatory communications begins. The provider cannot simply ignore the situation, nor can it skip steps. The rules require specific actions at 18 months, 27 months, and 36 months.

Separately, firms must also maintain an adequate policy for identifying and dealing with customers showing signs of actual or possible financial difficulties, even if those customers have not missed a payment. This is a related but distinct obligation under the FCA's CONC rules.

The persistent debt rules operate around three key intervention points. Each triggers specific obligations on the part of the credit card provider.

The 18-month point (first communication)

After 18 months of persistent debt, the provider must send the customer a communication that explains what persistent debt means, sets out the benefits of increasing payments, encourages the customer to make contact, warns of the implications if the pattern continues, and provides contact details for free debt advice services. This communication must be in plain language and delivered through an appropriate medium, taking into account the customer's preferences.

The 27-month point (second communication)

If the customer remains in persistent debt between 9 and 10 months after the first communication (approximately 27 months total), the provider must send a further communication. This acts as a reminder and update. The provider must analyse the customer's payment pattern and assess the likelihood that the customer will still be in persistent debt at the 36-month mark. The communication may suggest an increased payment amount or a new repayment plan.

The 36-month point (third communication and potential action)

If the customer is still in persistent debt after 36 months, the provider must take a number of steps. It must set out options for repaying the balance within what the FCA considers a "reasonable period." Firms are expected to offer ways to repay within a reasonable period (often framed as a few years), taking account of affordability. The provider must request that the customer respond, warn that the card may be suspended if there is no response, and again provide details of free debt advice.

Card suspension or cancellation

At the 36-month stage, if the customer does not engage with the provider's communication, or if the customer confirms that the repayment options offered are affordable but states they will not increase payments, the firm is generally expected to restrict use of the card. These expectations are subject to the FCA's exceptions and forbearance requirements — firms must also consider affordability, financial hardship, and whether suspension would cause significant adverse impact before restricting access.

Forbearance

If the customer confirms that the repayment options are unsustainable, or if the customer's payment patterns show they are unlikely to repay the balance within a reasonable period, the provider must treat the customer with forbearance and due consideration under the FCA's CONC rules. Forbearance may include reducing, waiving, or cancelling interest, fees, or charges.

"I haven't missed a payment — why am I getting this letter?"

Persistent debt has nothing to do with missed payments. A customer can be making every minimum payment on time and still be classified as in persistent debt. The test is purely mathematical: whether more money has gone toward interest, fees, and charges than toward reducing the principal over an 18-month period.

"Does this mean I'm in debt trouble?"

The persistent debt classification is a regulatory trigger, not a judgment about someone's financial situation. The FCA introduced the rules because it identified that customers making only minimum or near-minimum payments could end up paying far more than they originally borrowed over the life of the balance.

"Will my card definitely be suspended?"

Card suspension is not automatic at the 18-month or 27-month stages. Suspension becomes a possibility only at the 36-month stage, and even then, only if specific conditions are met — primarily, if the customer does not engage with the 36-month communication, or if the customer confirms they can afford higher payments but refuses to make them. The FCA's framework also requires firms to consider exceptions and forbearance before restricting card use. In some circumstances, a suspension may be withdrawn if a customer subsequently engages with the provider.

"Is 'persistent debt' the same as 'default'?"

No. A default is a separate process that typically follows missed payments. Persistent debt is a distinct regulatory classification based on the ratio of interest payments to principal repayment. The two can exist independently of each other.

"Do all providers handle this the same way?"

The FCA rules set the framework, but different providers may implement the rules with different solutions. For example, some providers may offer paydown plans, balance transfers to a personal loan, or increased minimum payment arrangements. In most cases, the specific options available will depend on the individual provider's policies and the customer's circumstances.

Several important exceptions apply to the persistent debt rules.

• The £200 threshold. A de-minimis threshold applies (around £200) below which the persistent debt intervention does not apply. This is a statutory exemption within the FCA's rules.
• Existing forbearance. Card suspension is not required where the firm is already taking steps equivalent to, or more favourable than, the forbearance treatment expected under the FCA's persistent debt rules. In that case, the firm must continue taking those steps.
• Adverse impact of suspension. The FCA's guidance states that suspension will "generally be necessary" for customers in forbearance, to help ensure repayment within a reasonable period. However, suspension is not required where it would cause "significant adverse impact on the customer's financial situation" — for example, where the customer depends on the credit card for meeting essential living expenses such as mortgage or rent payments, council tax, food, or utilities.
• COVID-19 payment deferrals. COVID-19 forbearance affected how some firms applied the persistent debt interventions during the FCA's temporary guidance period in 2020.
• The clock can restart. If a customer exits persistent debt — for example, by increasing their payments — but later reverts to lower payments and re-enters persistent debt, the 18-month intervention cycle starts again from the beginning. The clock does not continue from where it left off.
• Blanket suspensions. Firms may suspend cards where they have an "objectively justifiable reason" even outside the mandatory suspension triggers. However, the FCA has expressed concern about "blanket" suspensions, indicating that suspension must be individually justified.
• Provider-specific timing. In most cases, providers follow the standard 18/27/36-month framework. However, some providers may suspend cards at the point of setting up a paydown plan, while others may extend to 39 months if the customer remains in persistent debt. This may vary depending on the individual firm's implementation of the rules.
• Business credit cards. The persistent debt definition applies to personal credit cards only. Business credit cards promoted solely for business purposes are excluded under the FCA's rules.

The persistent debt system is designed as a graduated process. The first letter at 18 months is informational. The second at 27 months is a reminder with additional analysis. The third at 36 months is where the provider is required to offer concrete options and where the consequences of not engaging become more significant.

At the 36-month stage, the provider must offer repayment options designed to clear the balance within what the FCA considers a reasonable period (often framed as a few years), taking account of affordability. The customer is asked to respond. If the customer does not engage, or if the customer acknowledges affordability but declines to increase payments, the firm is generally expected to restrict use of the card, subject to the FCA's exceptions and forbearance expectations.

If, on the other hand, the customer engages with the provider and indicates that the proposed options are not sustainable, the provider must treat the customer with forbearance. This may include reductions or waivers of interest, fees, or charges.

It is worth noting that the FCA rules establish the framework, but the specific repayment solutions offered will vary between providers. There is no single mandated repayment plan structure. What is mandated is the process: the timing of communications, the content requirements, and the actions the provider must take depending on the customer's response.

• Definition: Persistent debt is a regulatory classification, not an indication of missed payments or default. It is triggered when a customer pays more in interest, fees, and charges than they repay of the principal balance over an 18-month period.
• Process: The FCA requires credit card providers to follow a structured communication process at 18, 27, and 36 months.
• 36-Month Review: At the 36-month stage, providers must offer repayment options and the firm is generally expected to restrict use of the card if the customer does not engage or declines to increase affordable payments, subject to exceptions and forbearance considerations.
• Rights: Customers who confirm that repayment options are unsustainable must be treated with forbearance.
• Scope: A de-minimis threshold (around £200) applies below which the intervention does not apply, and business credit cards promoted solely for business purposes are excluded.
• Variability: The specific repayment solutions offered at the 36-month stage vary between providers, as the FCA sets the framework but allows firms discretion on the details of repayment options.