What to do if your credit card lender asks you to pay off more of your debts
CREDIT card borrowers who only pay the minimum each month are being told to up their payments - but here's what you to do if you're asked to pay more.
Thousands of people have been contacted under new rules to try and tackle so-called persistent debt, which covers those who've spent 18 months just making minimum repayments.
Banks have had 18 months to convince borrowers to increase repayments, and those who haven't responded now face having their accounts suspended or closed this month.
But if you are struggling, you do have options - here a round-up of what you should do.
1. Talk to your bank
If you're struggling to pay anything above the minimum owed, you should firstly speak to your lender.
Banks and building societies have been warned by regulator the Financial Conduct Authority (FCA) that they must either reduce, waive or cancel any interest or charges for customers who've been trapped in a cycle of debt.
So get in touch and request this as a first port of call.
Sara Williams, a debt expert who blogs at said: "Don't ignore these letters because you think they are vague or you hope nothing will happen or because you can't afford to pay any more.
"Talk to the lender and explain your situation. Ask what the lender can do to help by reducing the interest you are being charged as you cannot afford to pay more."
Note that lenders must come up with a repayment plan for customers who've been in debt for three years, even before the borrower contacts them about the issue.
Banks have also been warned to help customers with large overdraft debts as they've announced plans to charge customers up 50 per cent from April 6.
2. Check if you can do a balance transfer
If you're being charged interest on your credit card debt, it's worth exploring whether you can shift it all onto a 0 per cent balance transfer credit card.
This means you don't have to pay interest during the 0 per cent period, giving you time to clear the actual debt.
The longest card is currently 29 months with Sainsbury's, according to MoneySavingExpert.com, although it comes with a pricey 2.74 per cent fee.
Barclaycard offers the longest 0 per cent period without a balance transfer fee at 20 months.
Use to check which cards you're likely to be accepted for before applying - this only leaves a soft search on your credit file so it won't damage your score.
Just remember to clear the debt before the 0 per cent period ends or shift it to a different interest-free balance transfer card.
3. Prioritise the highest cost debt
If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card, which is the one with the highest interest rate.
For those with debts other than just credit cards, your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't.
Explain to other lenders that you're doing this as it may encourage them to offer you a repayment holiday or to freeze the interest for a period of time.
4. Consider consolidating your debts
If you have multiple debts that you're struggling to prioritise, Ms Williams suggests consolidating them so you only have just the one debt repayment each month - hopefully at a lower interest rate.
You could do this by asking your credit card provider to consolidate all the credit card debts together, by shifting the debt to a personal loan, or you could consider a debt management plan.
But before you do, explore the options and ask companies what impact this will have on your credit score, and what happens if you miss a repayment.
If you do think you'll miss a repayment, call the company in advance and try to come to an agreement.
The Money Advice Service has a guide of you can speak to, while StepChange has a that helps you to understand if it's the right option for you.
Ms Williams warned: "Don't consolidate unless the new credit is very cheap and never put your house at risk with a secured loan unless you have talked to a debt adviser first.
"But if you don't have good credit or the amounts are very large this can be impossible."
More on debts
Ms Williams added: "Alternatively, a debt management plan can work like a consolidation loan - the plan provider deals with all your creditors, you make one payment per month.
"The interest is usually frozen on your debts and the payments can be varied, so it is much more flexible."
Bear in mind a debt management plan will almost always have a negative impact on your credit score, which may impact your ability to take our credit in future.
Ms Williams says that if banks suggest moving your debt to a different form of credit, such as to a loan, don't be afraid to turn this down if it means higher repayments that you can't meet.
5. Speak to a free debt advice charity
If you’re struggling to pay your debts month after month and you'r unsure which open is right for you it’s important you get advice as soon as possible, before they build up even further.
Charities such as , and can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
They can also discuss possible solutions with you such as a debt management plan, a debt relief order, an IVA, and bankruptcy.