Persistent credit card debt can affect mortgage affordability, credit conduct and the suitability of future borrowing.
For mortgage advisers, the issue is not simply the outstanding balance. The repayment pattern may reveal whether a client is reducing their debt or relying on long-term revolving credit.
At a glance
The FCA introduced persistent-debt rules after finding that millions of credit card accounts remained in debt for extended periods.
Mortgage advisers should consider:
- the balance and credit limit;
- minimum-payment behaviour;
- interest and charges;
- recent missed payments;
- overall affordability;
- the client’s reason for considering consolidation;
- whether secured borrowing would improve the client’s position.
Debt consolidation may reduce monthly payments. However, extending borrowing over a mortgage term can increase the total amount repaid. It can also convert unsecured debt into borrowing secured against the client’s home.
What Is Persistent Credit Card Debt?
The Financial Conduct Authority defines persistent credit card debt as a position where, over 18 months, a customer pays more in interest, fees and charges than they repay from the amount borrowed.
This means the customer may continue making payments without substantially reducing the balance.
The FCA’s credit card market study examined accounts belonging to 34 million customers over five years. It found around four million accounts in persistent debt.
Customers in persistent debt paid an average of approximately £2.50 in interest and charges for every £1 repaid from their borrowing.
The problem was therefore not simply missed payments. Many customers re
How Brokers Support Clients with Persistent Credit Card Debt.
Liz Syms, CEO and Founder of Connect for Intermediaries, highlights the vital role that brokers play in supporting individuals struggling with persistent credit card debt. This need became even more urgent following a major regulatory shift in 2018, when the Financial Conduct Authority (FCA) introduced new rules to protect consumers in the credit card market.
Effective from March 1, 2018, and enforced by September that year, these regulations were designed to strengthen protections for financially vulnerable borrowers and ensure more responsible lending practices.
The changes followed an in-depth market study that examined the behaviour of 34 million credit card holders over five years. Feedback from nearly 40,000 consumers revealed troubling statistics:
- In 2014, 5.6 million people were identified as being in problematic debt.
- Of these, 2 million had defaulted or were in arrears.
- Another 2 million had maxed out over 90% of their credit limit for at least a year.
- 1.6 million were only making minimum repayments, putting them at risk of long-term debt.
These findings underscored the need for proactive financial support. Brokers, with their comprehensive knowledge of debt solutions, are uniquely positioned to help clients navigate these challenges.
By offering tailored advice, access to specialist lending options, and referrals to relevant debt management or credit repair services, brokers act as crucial intermediaries. Their role extends beyond mortgages; they help clients regain control of their finances and build toward future stability.
In a regulatory environment focused on customer protection, brokers are more essential than ever. With a deep understanding of credit risk, evolving policies, and access to a wide panel of lenders, they can guide borrowers through even the most complex financial scenarios.
Regaining Financial Control Through Regulatory Support
In line with evolving FCA regulations, credit card companies must now take active steps to support customers caught in persistent debt, defined as making low repayments for over 18 months and paying more in interest and fees than towards the actual balance.
Once a customer reaches the 18-month threshold, firms must proactively engage and encourage changes in repayment behaviour. Customers must be informed that failure to act may result in suspension of their credit card.
For those who’ve already spent 12 consecutive months in persistent debt, companies are no longer permitted to offer automatic credit limit increases to ensure greater transparency and financial protection.
This initiative is expected to affect over 1.4 million accounts annually and aligns with broader efforts to foster responsible credit management. It gives individuals greater control over their borrowing without exposing them to unchecked lending practices.
For tailored funding solutions that prioritise financial well-being and accountability, explore our development finance options designed to support structured growth and debt control.
How the FCA Rules Worked in 2020
The FCA rules took effect on 1 March 2018. Credit card firms had until 1 September 2018 to comply fully.
The intervention process included several stages:
- After 18 months: The provider had to contact the customer and encourage faster repayment where affordable.
- After 27 months: A further reminder was required if the customer appeared likely to remain in persistent debt.
- After 36 months: The provider had to offer a way to repay the balance within a reasonable period.
- Where higher payments were unaffordable: The provider had to consider forbearance, including reducing or cancelling interest, fees or charges.
Customers who had remained in persistent debt for 12 months were also excluded from automatic credit-limit increases.
Advisers reviewing historical cases can read the original FCA persistent credit card debt rules.
Why Credit Card Repayment Patterns Matter
A credit card balance alone does not explain a client’s financial position.
Two clients may each owe £8,000. However, their circumstances could be very different.
One may be making fixed monthly payments and steadily reducing the balance. The other may be making minimum payments while continuing to use the card for household costs.
The second pattern may indicate financial pressure, reduced disposable income or reliance on credit for normal expenditure.
This can affect:
- mortgage affordability calculations;
- credit scoring;
- lender confidence;
- maximum borrowing;
- product availability;
- the sustainability of future payments.
Recent missed payments, cash withdrawals and high credit utilisation may also influence lender decisions.
What Mortgage Advisers Should Assess
A structured fact-find should examine more than the client’s requested loan amount.
Credit commitments
Record every credit card, loan, overdraft and finance agreement. Confirm the balance, monthly payment and remaining term where applicable.
Repayment behaviour
Establish whether the client pays the minimum amount, a fixed sum or the full balance. Review whether the debt is reducing.
Credit utilisation
A balance close to the available credit limit can indicate financial pressure. It may also affect the client’s credit profile.
Reason for the debt
The purpose and history of the borrowing matter. One-off expenditure differs from ongoing reliance on credit for essential household costs.
Current and future affordability
A lower initial monthly payment does not automatically create a better outcome. Advisers should consider the proposed term, interest costs and foreseeable changes in income or expenditure.
Credit conduct
Missed payments, arrangements to pay and defaults may reduce the range of available mortgage options.
Connect Network members can access wider compliance and regulatory support when assessing complex advice cases and documenting the reasons behind a recommendation.
Can Credit Card Debt Be Consolidated Through a Mortgage?
A homeowner may consider consolidating credit card debt through:
- a further advance;
- a remortgage;
- a second charge mortgage;
- another form of borrowing.
These options must not be presented as automatic solutions.
A lower mortgage rate may reduce the client’s monthly outgoings. However, spreading the balance across a longer term could increase the total interest paid.
For example, unsecured debt that might otherwise be cleared within five years could remain within a mortgage for considerably longer.
The advice process should compare:
- the current monthly payments;
- the proposed monthly payment;
- the current repayment period;
- the proposed mortgage term;
- fees and early repayment charges;
- the total amount repayable;
- the effect on loan-to-value;
- the consequences of missed secured payments.
Advisers considering a second charge route can review the network’s second charge mortgage guide.
The Risk of Converting Unsecured Debt
Credit card borrowing is normally unsecured. A mortgage or second charge is secured against property.
Consolidating credit cards into secured borrowing may therefore place the client’s home at risk if repayments are not maintained.
The client should understand that:
- the debt may be repaid over a longer period;
- the total borrowing cost could increase;
- mortgage or legal fees may apply;
- further spending could recreate the original credit card balance;
- missed mortgage payments may lead to repossession.
The purpose of advice is not merely to reduce today’s payment. It is to establish whether the proposed structure remains sustainable tomorrow.
When Specialist Support May Be Appropriate
A mortgage adviser can assess mortgage suitability and the effect of credit commitments. However, clients experiencing serious financial difficulty may also require specialist debt advice.
This may be appropriate where the client:
- cannot meet essential household costs;
- has several missed payments;
- is using new credit to repay existing debt;
- has received default or enforcement notices;
- cannot afford the provider’s proposed repayment plan;
- requires advice about formal debt solutions.
Where mortgage advice remains appropriate, Connect members can use the network’s adviser services for placement support, lender access and specialist case guidance.
Consumers who need mortgage advice can also search the Connect Experts mortgage adviser directory by location, mortgage need and personal preference.
Supporting Better Client Outcomes
Persistent credit card debt often develops gradually. Regular payments can create the appearance of control even when the underlying balance is barely changing.
A careful adviser looks beyond the monthly payment. They examine how the debt developed, whether it is reducing and what any proposed mortgage solution would cost over its full term.
That distinction supports clearer advice, stronger records and more sustainable client outcomes.
Frequently Asked Questions
Does credit card debt prevent someone from getting a mortgage?
Not automatically. Lenders normally consider the outstanding balance, monthly payment, credit utilisation, repayment history and overall affordability. High balances or missed payments may reduce the available options.
Is remortgaging always cheaper than credit card borrowing?
No. The mortgage interest rate may be lower, but the debt could be repaid over a much longer term. Fees and early repayment charges may also affect the overall cost.
Can mortgage advisers give debt advice?
Mortgage advisers can assess credit commitments and advise on suitable mortgage products within their permissions. Clients requiring advice on formal debt solutions should be referred to an appropriately authorised debt-advice provider.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it.