Minimum Payments Awareness Month

Minimum Payments Awareness Month

What are Minimum Payments

Minimum payments are the lowest payment a creditor is willing to accept per month.

The idea behind minimum payments are meant to provide flexibility should you require it.  For example, if it is a bad month then you just need to pay the minimum payments on your credit card, store card or catalogue.

Paying the minimum payments usually covers any interest or charges of that debt leaving only a small payment being paid towards the reducing the overall balance.

A minimum repayment example:

If you had £5,000 outstanding on a credit card, with an interest rate of 19.9% a minimum repayment for month one of £132.92, you would be repaying £50 off the loan, and £82.92 in interest.

The minimum repayment then reduces every month if you don’t spend any more on the card. That’s one reason making minimum payments over a long period is a bad idea.

After three years the balance would still be £1,895.51, and you would have paid £1,936.66 in interest.

What is Persistent Debt

Persistent debt is a term used by the FCA where the person is paying more in interest, fees and charges than towards paying back what they have borrowed.

Remember- credit cards are designed for short-term lending

Responsibilities of a lender

If you have been contacted by a bank of credit card lender to say you are in “persistent debt” do not panic.

New rules were introduced means that creditors have to take reasonable measures to assist customers by either increasing minimum payments or event stopping further spending on the account.  This means the debt is paid off quicker.


I cannot afford to pay more towards my credit card

If you are not able to support an increased payment, then you may benefit from debt advice or financial review.

We are an Independent Scottish Firm of Chartered Accountants and able to provide debt advice on several debt solutions.


Please contact us on 0141 566 7038 or email us at contact@wyliebisset.com