Credit Card Debt Warnings ‘Going Largely Ignored’

Communications designed to encourage people in long-term credit card debt to start dealing with their issues are going widely ignored across the country.

People who have only been paying back minimal amounts to their credit card lenders for several years or more are being urged to enter repayment plans but the latest evidence suggests they’re generally not very interested in doing so.

According to the debt help charity StepChange, only a small proportion of recipients are responding proactively to official reminders about their persistent debt scenarios, with the vast majority of people simply ignoring them.

The issue is that people who pay more in interest and charges to their credit card lenders than they pay off on their balances are coming under increased scrutiny from the Financial Conduct Authority (FCA), which is responsible for regulating the UK’s entire financial services industry.

Debtors who go more than 27 months without paying off any more than the minimum amounts on their credit cards can expect to receive a second reminder letter about the issue from June 1st.

However, from March 2019, once someone has gone more than three years without making any inroads into their credit card debts, they will be formally required to enter a debt repayment plan.

StepChange is concerned that so many people have been ignoring the communications they’ve got so far on this issue that they will be taken completely by surprise when suddenly they find themselves being required to start doing something about their debts.

“The regulator’s approach to how credit card providers should address longstanding credit card debt initially relies on getting them to encourage people to increase their payments voluntarily,” explained Phil Andrew, StepChange’s chief executive.

“We don’t know how many people have increased their credit card payments as a result of the communications they’ve received, but our sense is that not many have.

“At this point there may be significant numbers of people with ‘hidden’ problem debt who are coping on a minimum payment basis but could tip over into difficulty once higher payments are required.”

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