Why am I still paying this debt?

In 2013, Thomas obtained a credit card from a lender. His credit limit increased over the years, and he generally ran close to that limit – he had a ‘maxed out’ card. Over the years he made purchases totalling $12,000. Thomas generally paid the minimum monthly payment and/or did not pay the entire balance of his credit card each month. There was also a period where Thomas was experiencing financial hardship and made reduced payments.

In 2021, Thomas stopped making payments towards his credit card, still owing about $6,000. The lender attempted several times to contact Thomas but was unable to reach him.

Thomas then complained to the lender. He said he’d paid $20,000 towards his credit card over the years and could not understand why he still had $6,000 to pay. The lender offered to write off the balance of his account. Thomas still thought he’d overpaid, and was due a refund, and he complained to FSCL.



Thomas felt he’d been making payments towards his credit card for years yet still owed $6,000. He wanted FSCL to independently investigate and assess whether the lender’s offer seemed reasonable.

The lender wanted to resolve the complaint and was prepared to write off the balance of Thomas’s debt. However, the lender did not consider it needed to write off the balance of the debt and pay any further refund to Thomas.



We reviewed the history of Thomas’s credit card account, including all payments made, and the interest and fees debited to the account. We thought the lender’s offer to write off the $6,000 balance was reasonable because:

  • Thomas had made purchases of $12,000 and there had been about $1,800 in fees charged to the account since Thomas first took out the credit card. We said those amounts needed to be paid.
  • We could see that $11,700 had been charged in interest over the years. Although that seemed to be a high amount of interest charged on $12,000 of purchases, we pointed out to Thomas that we could see how that high figure had been reached. This was because:
  • There was a period where Thomas was in financial hardship and reduced his payments, and he’d also stopped paying his credit card in early 2021. During both those periods the balance increased, and interest continued to accrue.
  • The biggest influencer on the high amount of interest was that Thomas had sat close to the credit limit for most of the time he’d had the credit card. If only minimum payments are made, and there’s an interest rate of 25.25% per annum, the total interest charged over the years will be high.
  • In offering to write off the balance of Thomas’s debt ($6,000), the lender was essentially agreeing to write off half the interest that had been charged over the years ($11,700).



Thomas decided to accept the lender’s offer. The $6,000 balance was written off and the complaint was resolved.


Insights for consumers

Credit cards are a common form of consumer credit. However, consumers often underestimate the effect of only paying the minimum monthly payments and having a ‘maxed out’ credit card. Especially when the debt is carried for many years, the effect of compounding interest at high interest rates can result in consumers making little to no progress on reducing their credit card debt. This often leaves consumers with the feeling they must have overpaid, when that’s not the case.