For people living in Scotland and who are struggling with debts may find that their credit card debt may be holding them back as ‘persistent debt’.
Essentially, if you make a minimum payment on your credit card debt, and have been doing so for a while, then you may have received a letter from the credit card firm stating that you should increase your monthly repayment.
If they have been contacted but haven’t been asked for higher monthly repayments, they may phrase it suggesting that you do so.
That’s because the Financial Conduct Authority says that anyone with a credit card who has been paying more in charges and interest than their balance for at least 18 months should now be looking to increase their credit card payment.
What is persistent debt?
But what is persistent debt? A persistent debt is defined as one where you pay more in charges and interest on your credit card than you have repaid on the amount you borrowed.
Since minimum payments tend to cover only the charges and interest on the debt, only a small part of that payment will actually reduce the balance.
However, by paying more every month you could reduce your balance dramatically and save yourself money at the same time.
It’s important to appreciate that a persistent credit card debt will take a long time to reduce because most of the monthly payment goes to paying the interest on the debt.
Repay your credit card debt
If you want to know how long it will take to repay your credit card debt then there is a minimum payment calculator on the UK Finance website which will show how long this will take.
As an example, one charity says that for someone who has £2,796 on their credit card, a card they are no longer using, then by paying the minimum amount will take them 28 years to pay off the debt.
With the same debt, and paying the minimum amount plus £10 means they could repay that figure in 11 years.
The best way to get out of persistent debt is to understand where you can reduce your outgoings.
This may also help those in debt consider how much they can save towards getting out of their persistent debt situation.
Helpful debt advisers at Scotland’s Trust Deed
It’s at this point you may be need independent and impartial advice and there’s a team of helpful debt advisers at Scotland’s Trust Deed.
They are available to speak with every day and you don’t have to take the advice they give.
During a conversation they may discuss other debt solution options available to those who live in Scotland.
They include a Scottish trust deed, the debt arrangement scheme and sequestration, which is also known as bankruptcy.
Scottish debt solutions
The team at Scotland’s Trust Deed can also help begin the process to access one of the Scottish debt solutions and also discuss other potentials including a debt management plan, informal negotiation as well as debt consolidation and write-off.
For more help and advice about dealing with persistent debt, then it’s time to speak with the helpful team at Scotland’s Trust Deed.