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i This advice applies across the UK

What interest and charges can be added to my debt?

Lenders add interest to most debts. They also add extra charges if you do not pay on time.

The people you owe can charge interest  either:


  • At the same amount or
  • A ‘variable’ amount
    • This means it changes over time

They cannot increase the rate of interest because you miss payments.

Interest can be added:


  • In full, at the start of the loan
  • In intervals while you are paying off the loan

Interest on credit cards or overdrafts is normally added monthly.

Lenders can add extra charges if:


  • You miss payments
  • You make late payments

They can only add charges if they are explained in your credit agreement. The charges must be:


  • Fair
  • Based on actual costs

For example:

A lender cannot charge you £100 for a letter even if it is in your agreement.


  • This is not a fair amount
  • It is a lot more than the cost of sending a letter

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What is APR?

APR means 'annualised percentage rate'. This is how much the interest increases the debt in a year.

It costs more to borrow when the percentage is higher.

For example, an APR of 100% means your debt would double in a year.

For debts regulated by the Consumer Credit Act:

  • You must be told the APR before you sign the agreement
  • This is so you know what you have to pay back

Use the APR to compare the cost of loans or cards.

Remember: The total interest added depends on how long it takes to pay off the debt.

Let's say you want to borrow £100:

Interest rate Time borrowed over How much you will pay
30% APR 1 year £130
10% APR 5 years £150

Always check your credit agreement to find out the rate of interest you are charged.

Lenders often show ‘typical’ APR in their adverts. You may be charged more if your credit file shows missed payments to other debts.

Will the people I owe stop interest and charges on a debt?

The people you owe may agree to reduce or stop interest and charges if you are:


  • In arrears
  • Struggling to pay

The Lending Code, which most banks and card companies follow, says they should ‘consider’ doing this, but they do not have to.

Their decision may depend on:


  • The amount you owe
  • How long you are in arrears
  • How much you can pay towards the debt

Most creditors stop interest and charges once your debt:


It is not common for charges on a debt to keep increasing over a long time.

What should I do if the interest and charges are too much?

Make a complaint if:


  • A creditor is adding interest and charges which are more than what they said in your credit agreement
  • You told a creditor you are in financial difficulties but they keep adding interest and charges

Can you help me get interest and charges stopped?

The people you owe are more likely to stop or reduce interest and charges if you can prove you are in financial difficulties.

Use our online debt advice tool to:


  • Build a budget and
  • Show what you can afford to pay
  • Find a debt solution

Some debt solutions stop interest and charges, like:


Other debt solutions, like a debt management plan (DMP), do not force the people you owe to stop interest and charges. We will ask them to, but there is no guarantee they will agree.