Persistent debt

When a bigger percentage of your card repayments go towards interest, fees and charges rather than towards paying off what you owe (your balance) over a sustained period, this is now referred to by the Financial Conduct Authority as ‘persistent debt’.

This can happen when you make minimum or low monthly repayments for a long time. Having a ‘persistent debt’ could make it more likely that a customer could get into difficulty with debt in the future, so the FCA have introduced rules to help prevent this.

The Financial Conduct Authority (FCA) has introduced rules to help people avoid expensive, longer-term credit or store card debt (this is also known as ‘persistent debt’). They state that all customers who’ve been paying more in interest and charges than towards what they owe for 18 months or more should try to increase their payments.

Under these rules, we must encourage customers to pay more if they have been in ‘persistent debt’ for 18 months or more. We also need to make you aware of other payment options and warn you what could happen if you continue to make low repayments.

The ‘Persistent debt’ rules apply to you if you’ve paid more in interest, fees and charges than you’ve paid towards the amount you borrowed, over an 18-month period. We'll write to you to let you know if this applies to you.

Under these rules, companies like us must ask customers who are in ‘persistent debt’ to pay more each month, and let them know about other repayment options and warn them what could happen if they continue to make low repayments. See What happens if I don’t increase my payments? below

We also must make sure customers who can’t afford to repay more quickly are aware that free independent advice is available.

If you pay more each month, more of the money will go towards your balance and you’ll pay back what you owe quicker. If you can’t afford to pay more every month, you can make additional payments whenever you have enough money so you reduce your balance (how much you owe).  You can log in to your account to make additional payments at any time or use our automated telephone service, call 0333 155 4610.

If you stop using your card for purchases and you increase how much you pay back each month your balance will reduce quicker. There are online tools you can use to help you understand how you can save money on interest charges and compare repayments. Increasing your monthly payment in line with what’s affordable to you will clear your balance sooner. A variety on online repayment calculators are available to help you budget and see what's manageable for you.

You can look at your income and your outgoings each month to understand how much more you can afford to pay back. If you need help budgeting you can get free, independent money advice.

If your payments aren't high enough to change your situation in the 18 months after we first tell you that you're in ‘persistent debt’, we'll look at ways for you to repay quicker, over a reasonable period. If you get to this stage, it’s important that you take action as we may have to suspend your card if you don't (which means you wouldn’t be able to use it for any more purchases).

Suspending your card means you won't be able to make any more purchases with your card. This would prevent the amount you owe (from purchases) from growing.

Suspending your card is one of the steps in the FCA rules to protect you from ‘persistent debt’ if you continue to make low or minimum payments for two 18 month periods in a row. We would do this as a last resort if you can't afford to pay off your card in a reasonable timeframe. Also, if you tell us you don't want to increase your payments (even if you can afford to) or if you don't reply to our messages we can still suspend your card.

If you’re up to date with payments on your account, your minimum payment is the lowest amount you can pay each month. This amount is shown on your monthly statements; it includes any interest due for the month and (if applicable) any fees incurred (for example, because of a late payment in the previous month).

It's not a fixed amount, but a calculated percentage of your balance, your monthly statement will show you this. If you only make the minimum payment each month, it'll take you much longer to clear your balance and you will pay more in interest.

Any amount you pay that's above the minimum payment goes directly towards repaying what you owe. This means your debt will be paid back more quickly and it will cost you less in interest charges.

Rules have been introduced by the Financial Conduct Authority (FCA) to help credit and store card customers avoid long-term debt. As you’ve been making minimum or low repayments over the past 18 months, this means you’ve paid more in interest, fees and charges on your store card than towards paying back what you owe (your balance).

Under the FCA rules, your account is described as in ‘persistent debt’ and there are some steps that we need to take to tell you about this, encourage to you pay more back each month and explain what happens if you don’t increase your payments in the future. See How do I get out of Persistent Debt? or What happens if I don’t increase my payments?

Don’t worry, you haven’t done anything wrong. You’ve been making the minimum payments required for your store card as shown on your monthly statements.

However, the Financial Conduct Authority (FCA) rules to help prevent long term debt mean we need to make you aware that as you’re making minimum or low payments you’re paying more towards interest, fees and charges than towards paying off what you owe (your balance). See How do I get out of persistent debt? or What happens if I don’t increase my payments?

Persistent debt is a term used by the Financial Conduct Authority (FCA). Your account is described as in ‘persistent debt’ if you’ve paid more in interest, fees and charges than towards paying back what owe (your balance) over an 18-month period.

Persistent debt doesn't mean that you’re behind with payments; it just means you owe money that it's taking you a long time to pay back. So, if you’ve made minimum or low payments for your store card for the last 18 months or more, this applies to you.

You’ve been making the minimum payments required for your store card as shown on your monthly statements (see What is a minimum payment?). However, the Financial Conduct Authority (FCA) rules to help prevent long term debt mean we need to make you aware that you’re paying more towards interest, fees and charges rather than to paying off what you owe (your balance).

See How do I get out of persistent debt? or What happens if I don’t increase my payments?

Yes, you can make extra payments at any time. By paying more, you’ll clear your balance quicker and pay less in interest.

You can make additional payments at any time:

Pay online

If you have a New Look, Oasis, Warehouse, Karen Millen or IKEA card, you can log in to your account at ikano.co.uk/login to make a debit card payment.

From your bank account

Transfer directly from your bank account or set up a Standing Order to: Sort code: 40-02-50 Account number: 81341561

Always use your 16-digit card number as the reference for your payment so we can match this to your account.

By phone

Call 0333 155 4610 to make a debit card payment using our automated service.

Yes – as long as your retailer is still accepting payments through your card and your account is open, you can carry on using your card for purchases, however, please consider how you will pay back a larger balance. If your account is in ‘persistent debt’ it is advisable to stop using your card and increase how much you pay back each month so your balance will reduce quicker.

We may suspend your account (so you’re unable to use your card for purchases) if you continue to make low or minimum payments for two 18-month periods in a row. See What does suspending my card mean?

Please make sure you can afford it before you increase how much you pay each month. If you can’t afford to pay more every month, you can make additional payments whenever you have the money available – either log in to your account to make additional payments at any time or make a Debit card payment using our automated telephone service by calling 0333 155 4610.

You can get free, independent money advice to help with budgeting and understanding how much you can afford to pay back.

No, we’re not asking you to pay off your balance in the next 18 months. You just need to pay more back (if this is affordable each month) so you reduce your balance (how much you owe). As you’re making minimum or low payments each month, a bigger percentage of your payments go towards interest, fees and charges rather than towards paying off what you owe. This means it will take you a long time to pay back what you owe, and it will cost you more in interest charges.