Credit card debt: your options

Card debt tends to build slowly. A balance that felt manageable grows with interest, the minimum payment barely touches it, and then another card clears the first. Many people only realise how stuck they are when a letter arrives about “persistent debt” or a payment bounces. This guide explains the rules your card provider must follow, the ways out that do not involve a formal solution, and what happens to card debt in an IVA, a debt relief order (DRO) or bankruptcy.

Is credit card debt a priority debt?

No. Credit cards are non-priority debts. If you stop paying, the lender cannot send bailiffs or take money from your wages without first getting a county court judgment (CCJ). Any judgment on a regulated credit agreement, which covers almost all credit cards, can only be enforced through the County Court, whatever the amount.

That does not make card debt harmless. Missed payments damage your credit file, and a CCJ can lead to deductions from your wages or a charge on your home. But rent or mortgage, council tax, energy and court fines have faster and harsher consequences, so they come first. Our guide to priority and non-priority debts explains how to put them in order.

What does a persistent debt letter mean?

The Financial Conduct Authority (FCA) introduced persistent debt rules for credit cards in 2018. You are in persistent debt if, over the previous 18 months, you paid more in interest, fees and charges than you paid off the amount you actually borrowed. It usually happens when someone pays at or near the minimum for a long time.

The rules set out what your provider must do at each stage.

The same rules apply to store cards and catalogue accounts, which the FCA calls retail revolving credit.

Why does paying the minimum take so long?

FCA rules say a credit card’s minimum payment must cover at least the interest, fees and charges for the month plus 1% of the balance. Most of each minimum payment goes on interest, and because the minimum is worked out from the balance, it falls as the balance falls. That is why balances can last for many years.

Paying a fixed amount above the minimum is the simplest way to get out of this, if your budget allows it. If it does not, the options below are more realistic.

What can you do if you are struggling with card payments?

Talk to your card provider

Lenders must treat customers who are in arrears or financial difficulty with forbearance and due consideration. The FCA strengthened these rules from 4 November 2024. In practice that can mean a period of reduced payments, freezing or reducing interest and charges, or more time to pay. Contact the provider before you miss a payment if you can, and have a budget ready so your offer is realistic.

Balance transfer

Moving the balance to a card with a 0% introductory rate can save a lot of interest, but only if you can get one and clear most of the balance before the offer ends. You will need to pass a credit check, and StepChange says transfer fees are typically around 2 to 3% of the amount moved. It works best when you have a steady income, a reasonable credit record and a plan to stop using the old card. If you are already missing payments, you are unlikely to be accepted.

Consolidation loan

A loan to pay off several cards swaps many payments for one, sometimes at a lower rate. The risk is running the cards back up while still repaying the loan, or taking a loan secured on your home. Debt consolidation loan or IVA? compares the two.

Debt management plan

A debt management plan (DMP) is an informal agreement to pay your non-priority debts, such as cards and loans, in one affordable monthly payment. It is not legally binding, and creditors do not have to agree to it or freeze interest. Free DMPs are available, for example from StepChange and PayPlan, and some companies charge fees.

Settling for less

If you can raise a lump sum, for example from family, a lender may accept less than the full balance to close the account. This is called a full and final settlement. Get the agreement in writing before you pay anything.

Breathing Space

In England and Wales, a debt adviser can start a Breathing Space. For up to 60 days, creditors cannot contact you about the debts included, add interest or charges, or take enforcement action, while you get advice. You should still pay what you can.

What happens if you stop paying a credit card?

1. Late fees and missed payment markers. Your provider can add charges, and missed payments show on your credit file.
2. Default notice. Before ending the agreement or demanding the whole balance, the lender must send a default notice giving you at least 14 days to catch up.
3. Default on your credit file. A default stays on your credit file for 6 years from the date of default, even if you pay it.
4. Debt collectors. The account may be passed to a collection agency or sold to a debt purchaser. The debt is the same, and you can make an affordable offer to whoever now holds it.
5. Court action. The creditor can claim in the county court for a county court judgment. If you get a claim form, respond by the deadline and offer what you can afford.

If you are not sure a debt is yours or the amount is right, you can ask the creditor for a copy of the credit agreement: see how to ask a creditor to prove a debt. In England and Wales, a debt you have not paid or acknowledged in writing for 6 years from when the creditor could first sue may be statute-barred.

Can credit card debt go into an IVA, DRO or bankruptcy?

Yes. Credit card debt can be included in all three, and Citizens Advice lists credit cards among the debts an IVA can include. Formal solutions are usually considered when informal arrangements would take too long or creditors will not agree to them, and each has costs and serious effects.

• IVA. A legally binding agreement under the Insolvency Act 1986, set up and run by a licensed insolvency practitioner. Card providers vote on the proposal with your other creditors, and once it is approved, those bound by it cannot take further action over the debts included. A protocol IVA usually lasts 5 or 6 years, and fees are taken from your payments. Any debt still owed at the end of a completed IVA is written off, but how much you repay depends on what you can afford and what creditors accept. If the IVA fails, creditors can claim the full balance, including interest frozen during the IVA.
• DRO. A debt relief order is free and is for people with debts under £50,000, less than £75 a month spare, assets under £2,000 and a vehicle worth less than £4,000. It lasts 12 months, and the debts listed are then written off.
• Bankruptcy. Costs £680 to apply and clears most unsecured debts, including cards, usually after 12 months, but can affect your home and other assets.

IVA or debt management plan? sets out the differences for people whose debts are mostly cards and loans. IVAs are available in England, Wales and Northern Ireland. In Scotland, see debt solutions in Scotland.

What to do next

1. List your cards with the balance, interest rate and minimum payment for each, and make sure your priority bills are covered first.
2. If you have had a persistent debt letter, reply to it. If you can pay more, say how much. If you cannot, tell the provider you are in financial difficulty.
3. Get free, impartial debt advice from MoneyHelper, StepChange, Citizens Advice or National Debtline. An adviser can look at all your debts together and go through your options with you: see where to get free debt advice.

For other kinds of borrowing and bills, see types of debt. If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.