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?

Scotland > 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.

Who can I speak to if I have a complaint about a debt collection agency?

Scotland > Creditor action > Debt collection agencies

To make a complaint about a debt collection agency you should complain to them directly in the first place.

You can also contact the original creditor to complain.

Collection agencies must have a consumer credit licence to trade, so if your complaint is not resolved within eight weeks it can be referred to the Financial Ombudsman Service who can investigate the matter on your behalf.

Many collection agencies are also members of the Credit Services Association who have their own complaints process.