32 years to pay off a credit card?


32 years to pay off a credit card

Last week new rules came into force increasing protection for credit card customers at risk of financial difficulty.

Credit card customers in persistent debt pay around £2.50 in interest and charges for every £1 they repay. There are 4 million such accounts in the UK and last year 2/3 of callers to Step Change Debt Charity were struggling with credit card debt.

The new rules follow a comprehensive study by the Financial Conduct Authority of how the credit card market operates. 34 million credit card records and 40,000 consumers were surveyed.

The key finding will come as no surprise; making the minimum repayment on a credit card can prove hugely costly in the long run. Here are two tables showing how long it takes if you just repay the minimum balance each month or if you made a £100 fixed payment:

Time to repay a 21% APR card at 1% of the balance plus interest each month


Time to repay

Interest paid


32 years



28 years



19 years



Time to repay a 21% APR card at £100 plus interest each month


Time to repay

Interest paid


8 years six months



3 years six months



11 months


 You can use the Money Advice Service Credit Card Calculator to help better understand the cost of borrowing on credit cards.

Using credit cards can be a handy way to manage peaks and troughs in expenditure. They also provide extra protection when buying goods.  60% of people who have credit cards pay off the total balance each month. But it can be easy to get into debt. Here are some tips to help you avoid difficulty:  

  • Interest rates on credit cards are usually higher than for loans. If you’re making a big purchase a loan might be a cheaper option.

  • If you find yourself using a credit card to pay for day to day living expenses, you may want to look at your budget again. You could end up paying far more for basics that you’ve budgeted for, once interest payments are included.

  • Unless you pay off what’s owed each month, you can quickly spiral into debt if you continue spending on your card.

  • As well as the interest, there may be additional fees for exceeding your credit limit or missing a payment.

  • There are also charges for using a cash machine.

  • Cash withdrawals, maintaining a balance close to or over the limit, or spending to a limit very quickly can all adversely impact your credit score.

  • According to Citizens Advice during 2017, six million credit card customers had their borrowing limits increased without being asked, be careful of spending to your new limit.

Under the new rules lenders will have to take steps to help customers who are making low repayments over a long period, but these only kick in when a customer has been in persistent debt over 18 months

One option is to consolidate your cards into a single loan. You should only do this if it means that you will pay less interest, monthly payments are reduced and you can clear everything within a reasonable period of time. Paying a high rate for a consolidation loan or securing this against your property is not always a good idea and you may want to seek advice before you proceed. The Money Advice Service has produced a handy guide to get you started.