My credit card minimum payment’s gone up. Why?

You’ve been making payments on your credit card every month without fail. However, you’ve just got a letter from your credit card provider saying they’re going to increase your monthly repayment, or suggested you do so. Why?

If you’ve been paying more in interest and charges than the balance for 18 months or longer, this is classed as ‘persistent debt’.

Your minimum monthly credit card payment includes:

  • an amount for interest and charges
  • an amount to reduce what you owe

A persistent credit card debt takes a long time to reduce because all that’s being paid off is the interest, or at most a very small part of the balance. Increasing your monthly payment means you’ll pay more off what you owe, so you’ll clear the balance quicker.

The Financial Conduct Authority has ruled that all customers who’ve been paying more in interest and charges than the balance for 18 months or more should look to increase their payments. The sooner you deal with persistent debt, the less stress and more progress you’ll see in the long term.

How long will it take to pay my credit card off?

Let’s say that you owe £2967 on a credit card. The graphic below tells you how long it could take you to pay off this balance by only paying the minimum. It can also tell you how quickly you could pay the debt off by increasing your monthly repayment.

With each of these scenarios, imagine that your APR is 19 point 9 per cent. Option 1. If you only pay the monthly minimum payment, which in this case would be £29.67 plus interest, your overall balance will be £7295. It will take 28 years to clear your debt. Option 2. If you pay a fixed overpayment of £10 plus the minimum payment, your overall balance will be £5397. It will take 11 years to clear your debt. Option 3. If you pay a fixed payment of £75 per month. your overall balance will be £4580. It will take five years to clear your debt. Option 4. If you pay a fixed payment of £88 per month, your overall balance will be £4204, and it will take four years to clear your debt. Please note that your minimum payment will decrease over time.

By repaying more each month, you could dramatically reduce your credit card balance and save money and time. How much you need to pay depends on your interest rate. You also need to understand how much you can afford before committing to an increased amount each month.

(please note: these figures are based on estimates and can vary depending on your interest rate).

What if I don’t increase my payments?

You can either increase the payments yourself, or your creditor may increase them, but ultimately they’ll need to increase one way or another.

If you continue to make nine further minimum payments after receiving your persistent debt letter, you’ll get another reminder to pay more to your credit card balance.

If you continue to make a further nine minimum payments (eighteen in total) after receiving your letter, then your card provider will look at ways to help you pay off your balance within three to four years. They could:

  • Put you on an ‘increased payment plan’ to clear your card
  • Look at other forms of credit which could help you pay the debt off
  • Reduce your interest rate and suspend your card

Some credit card companies are changing their terms and conditions (T&C’s) to increase the minimum payment  in order to get customers out of persistent debt. If this happens to you, please be aware that if you don’t pay the increased amount each month you will be in breach of your T&Cs which could result in additional charges being applied and they may even suspend your card.

How can I get out of persistent debt?

By understanding your budget, you’ll know where you can cut back on spending. You can also start thinking about how much of the money you’ve saved can go towards getting you out of debt.

Visit the link below, and you’ll find a budgeting sheet that you can download, print and use to put your own budget together. You can download it as a PDF or Excel:

Struggling with cash? Not sure what to do?

Once you know how much money’s left over to pay your debts, you should consider one of the following options:

  • Pay the same amount each month – choose an affordable amount above your minimum payment and stick with it.
  • Pay your minimum payment, plus a fixed amount each month – Paying a few extra pounds every month can make a huge difference. UK Finance has a calculator that can help you work out a fixed monthly payment amount.
  • Make one-off additional payments when you can afford them. You’ll still need to ensure you pay at least the minimum payment every month to avoid breaching the terms and conditions of your card.

We also have a helpful factsheet (PDF) with more ideas on how to save money and boost your income.

How can I make savings in my budget to pay my debt off quicker?

These articles can help you spot opportunities to reduce your outgoings:

Can you commit to following some of these money-saving tips so you can repay more of your credit card bill?

Don’t forget to check the money-saving section of MoneyAware for more great ideas.

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I can’t increase my credit card repayments at the moment!

When you filled in your budget you may have found that you’ll struggle to pay your other bills and debts when your credit card repayments increase. But that’s understandable: only being able to pay the minimum can be a sign that you’re struggling financially.

We provide free and confidential advice to thousands of people struggling to repay their credit cards, loans and other bills. We’ll look at your whole situation and give you information on how best to deal with any debts you’ve got.

Call us on 0800 138 1111. We’re open Monday – Friday 8am – 8pm, Saturday 8am – 4pm.


If you’re unsure whether or not you need debt advice, our 60-second debt test can tell you in just a few minutes.

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