Charges and interest

If you fall behind with your payments or go over the limit you are allowed to borrow, you will be charged a fixed penalty by the creditor on top of your normal interest charge.

This can increase your debt quickly if you miss the required payment each month.

A creditor has the right to add charges and interest. All charges that can be added are stated upfront in the terms and conditions of the credit application which you are required to sign to take out credit. If you believe a creditor has added the charges unfairly, you may be able to claim these back.

In most cases, there is nothing you can do to stop interest and charges being added. However, if you make reduced payments over a long period of time, usually several months, most creditors will eventually stop charging interest and adding late payment charges.

Usually, a creditor will stop interest and charges either after they issue a default notice or they pass it onto a debt collection agency, although this does not always happen.

If you are having difficulty meeting payments on your debts, we strongly recommend you use our online debt counselling service, CCCS Debt Remedy, which will provide you with the best solution for your situation. Alternatively call our free Helpline on 0800 138 1111.

FAQs

What If I feel the charges added to my debt are unfair?

England and Wales > Creditor action > Charges and interest

Most agreements allow creditors to add charges and interest. If you feel that the charges are unfair or too high, you should first make a complaint to the creditor.

Creditors can add charges, but the Office of Fair Trading guidelines state these should be “based on actual and necessary costs” and should not be too high compared with the debt itself.

If you do not get a satisfactory response, you could contact the Financial Ombudsman Service who can investigate the matter further.

Will interest be added after a charging order?

England and Wales > Creditor action > Charges and interest

Some creditors may claim that a charging order means they can begin adding interest again. This is not correct.

If a debt is regulated by the Consumer Credit Act, no further interest should be added after a county court judgment. A charging order does not change this.

Statutory interest of 8% per annum may be added to debts over £5,000 which are not regulated by the Consumer Credit Act.

If a creditor appears to be adding interest after a county court judgment, please call us for advice.

Can creditors continue to add interest after a county court judgment (CCJ)?

England and Wales > Creditor action > Charges and interest

When a debt is regulated by the Consumer Credit Act, a creditor generally can not add any further interest after a county court judgment (CCJ). There may be extra charges added as a result of further court action.

In rare cases, a regulated creditor may request ongoing interest on the claim form (N1). If this happens, please contact us for advice.

If the debt is not regulated, statutory interest of 8% per annum may be requested by the creditor. This must be requested on the claim form (N1). Most non-regulated judgments over £5,000 will have statutory interest.