There are 2.5 million people trapped in credit card debt in the UK. This is why it happens

Millions of people across the UK use credit cards every day, whether that’s to spread the cost of a large purchase, a holiday, get benefits that come with certain products, or to help when finances might be tight one month. For many, credit cards repayments are met, and they don’t lead to problems. 

However, for those struggling to make ends meet, the flexibility of credit card repayment is double-edged: credit card balances build up, and it becomes difficult to repay the minimum each month, so repayment stretches into the long-term and becomes expensive.

Credit card debt has long been the most common type of debt among StepChange clients. So back in 2018, when new Financial Conduct Authority (FCA) rules on persistent debt came into force, we had high hopes that the credit card debt trap might finally be seeing the beginning of the end.

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These rules were meant to tackle the problem of consumers becoming trapped in expensive long-term credit card debt. Yet, eight years on, for many the credit card debt burden seems just as persistent as ever. 

YouGov polling for StepChange shows that an estimated 2.5 million people – 5% of all UK adults – are trapped in persistent credit card debt, meaning they have paid more in interest, fees and charges over the past 18 months than they have repaid towards the balance itself. The FCA’s own data shows that persistent debt increased between 2022 and 2024.

Persistent credit card debt is associated with wider financial difficulty. Eight in 10 of those in this situation find it difficult to keep up with household bills and credit commitments (compared to four in ten of the wider population).

When repaid over longer periods, credit cards stop being an affordable type of credit. Persistent credit card debt is particularly expensive and harmful for those with subprime cards with higher interest rates, typically with an annual percentage rate (APR) of 35% or above compared to the current market average of 22%. An estimated one in three customers with a subprime card is in persistent debt and they can easily end up repaying more than they borrowed in the first place.

Our polling also shows two in five people in persistent debt have been offered a credit limit increase over the past year – on a par with all credit card holders. It’s possible that these increases happened before the firm identified the cardholder as being in persistent debt, or perhaps the limit was offered on a different card than the one identified as in persistent debt. Either way, consumers in difficulty are being offered more credit at a time it is unlikely to help them.

We now want to see the FCA address flaws in its credit cards rules, improving lending rules so fewer people get into persistent debt in the first place, reducing the 36-month time period that triggers lenders intervening to support customers who are struggling, and ensuring customers in difficulty are not offered more credit likely to compound their financial problems.

Vikki Brownridge is CEOat StepChange.

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