"I always pay the minimum, so I'm fine"

This is the belief that lets a responsible person carry four thousand pounds for a decade. You've never missed a payment. The minimum goes out on time every month. That's the definition of fine.

StepChange, the debt charity, describes a rule the regulator brought in. If you've been making only the minimum payment for over eighteen months, you're in what the rules call persistent debt, and your lender will start contacting you about paying more or finding another way to deal with it. StepChange's own words are that this can sound scary but it means the debt is at a stage where it needs dealing with. The regulator looked at people paying the minimum on time, month after month, and gave that pattern a name, and the name wasn't fine.

Why would paying the minimum be a problem, if it's what the card asks for? Because of what the minimum is for. Neil Stewart, in 2009, pointed out that the minimum payment shown on a statement acts as a psychological anchor. People who see it pay less than they otherwise would, because the number pulls their repayment toward it. Daniel Navarro-Martinez and colleagues, in 2011, tested this with experiments on American consumers and field data from British cardholders. Presenting the minimum lowered how much people repaid. Raising the minimum level raised repayments for most people. And disclosing extra information alongside it, how much interest it would cost, how long it would take, did nothing to remove the effect of showing the minimum in the first place. The number on the page is the number people pay toward, whatever else is printed next to it.

Put that together. The minimum is set at a level that covers the interest and a sliver of the balance, so that the balance lasts. It's printed in the place your eye goes. It anchors what you pay. And a person who follows it faithfully for eighteen months gets a letter from their lender, because the regulator has noticed that faithful minimum payers are the ones who never get out. This is my inference from the research and the rule, not a statement of anyone's intent, but I don't know a better explanation of why the minimum is what it is.

You're not fine. You're reliable, which is different, and the card has been counting on the difference.