If you’ve received a communication from us that gives you an estimated Paydown Plan amount and you’d like to know more about how the plan will work, please see below.
Alternatively, if you've received a communication from us that confirms your Paydown Plan amount, please see our article on confirmed Paydown Plans.
Why have I received this communication from you?
If you’ve received a Paydown Plan communication from us, it means that you’ve continued to make the minimum payment, or close to the minimum amount, and your account over the this past 36 months. During this time, we wrote to you at different stages, encouraging you to make higher or additional payments and the benefits of this.
This type of long term borrowing is defined by the FCA as Persistent Debt. You can find more information in our article: What is Persistent Debt?
Your Paydown Plan will request a fixed payment to ensure your outstanding balance is paid in full in no more than four years.
Your plan is individual to you and specifically tailored to your account balance.
The start date of your plan will be confirmed on the communication we’ve sent you. The amount we request each period will be based on your outstanding balance at the start of your plan.
If you’d like to pay a higher amount than the figure we’ve provided, please feel free to do so! It’ll ensure your Paydown Plan balance is paid off sooner, and you’ll pay less interest overall.
What can I do to avoid a Paydown Plan?
To avoid a Paydown Plan being added to your account, you will need to clear your balance within 3 months of receiving your estimated Paydown Plan amount.
We’ve put together some questions and answers below, to make sure you’re 100% clear on what will happen next.
1. How does this affect my minimum payment?
Your minimum payment will be made up of two parts.
Outstanding Balance - this relates to your outstanding balance shown on your letter/email and will be referred to as a Paydown Plan.
New Spend Balance - this relates to any new orders placed on your credit account after Paydown Plan starts.
2. What impact will placing further orders have on my minimum payment?
You'll still be able to use your credit account. It just means that on top of your Paydown Plan payments, you'll need to make payments towards your new spending too, which will require a payment of up to 8% to prevent Persistent Debt in the future.
Here’s an example, based on your new spend repayment rate being 8%.
Your individual rate will be confirmed on the communication you receive when your Paydown Plan goes live.
Your outstanding balance is £1,000 and you’ve been given a fixed Paydown Plan amount of £40. This will be your new minimum payment and will be shown clearly on your statement.
If you then place an order for £100, the minimum payment for this new spend will be £8 (as your new spend repayment rate is 8% and 8% of £100 = £8).
To keep things simple, this will be added to your fixed Paydown Plan amount, bringing your total minimum payment to £48.
3. Can I still shop with you?
Of course! As long as it’s affordable, you can continue to shop with us as before, any items you purchase before your Paydown Plan is live, will be added to your Paydown Plan balance. This will mean that your balance will be completely paid off within 4 years, once your Paydown Plan is live.
4. What happens to my statement when my Paydown Plan starts?
We want to keep things as simple as possible, so you’ll still only be asked to make one payment each time we send you a statement. The minimum amount requested will consist of your fixed Paydown Plan amount and up to 8% of the balance of any new orders/charges incurred.
5. Do I need to make any changes to how I make my payments?
You can continue to make payments in the same way you do now – but the simplest way to pay is to set up a Direct Debit.
If you already have a Direct Debit set up and your current payment is less than the amount requested on your Paydown Plan, your Direct Debit will automatically be adjusted to reflect your plan.
If you choose to pay by standing order, you’ll need to check that it’s enough to cover your new fixed amount.
6. Will my credit file or credit score be negatively impacted by my account being in Persistent Debt?
No, there is no direct link between Persistent Debt and your credit score, providing you keep your account up to date by paying at least the requested minimum amount due by the payment date shown on each statement.
7. What if I can’t afford the new fixed amount?
We appreciate that your new minimum payment may be more than you are used to paying, and that this might make things difficult for you.
If you’re worried that you may not be able to pay the proposed fixed amount, or you’re currently struggling to make existing payments, please fill in our online form so that we can help you.
If you’re unable to access this form or need to speak to a member of our team, you can contact us by:
- Chatting with us
- Emailing email@example.com
- Calling us on 0345 074 2131 (lines are open Monday-Friday, 9am-5:45pm)
8. How long will it be before I receive a response?
You can expect to hear from us within 7 days.
Remember: the quickest and easiest way to contact us is via our online form.
9. Where can I get help if I'm worried about my finances?
We work with various organisations who can help support you, including: