Barclaycard customers who only make minimum repayments may find themselves in debt for an extra decade, paying hundreds of pounds in additional interest due to recent changes in terms by the credit card provider.
The UK’s largest credit card provider, Barclaycard, has informed customers about reducing their minimum payments to offer more flexibility, but this move has faced criticism for potentially increasing interest payments and prolonging the debt repayment period.
Credit card holders can choose to pay off their entire balance, a fixed amount, or the minimum required by the provider each month, with interest accumulating on the remaining balance if not cleared.
Effective July 22, Barclaycard is transitioning from a tiered payment structure to a new system that considers interest and fees, impacting all cardholders and potentially raising interest rates for some.
Under the new rules, customers will pay the highest amount among 1% of their balance, 1% of the balance plus any additional charges, or the total outstanding balance if less than £5.
Emails sent to customers highlight the decrease in minimum payments as a way to provide more payment flexibility, without explicitly stating the increased interest costs and extended repayment duration.
For instance, a cardholder with a £2,500 balance could see their minimum monthly payment reduced from £116 to £79, potentially leading to significantly higher interest payments and a longer debt clearance period.
The changes could result in customers paying substantially more in interest and taking almost double the time to clear their debt compared to the current payment structure.
This shift in minimum payments could have a significant financial impact on cardholders, emphasizing the importance of understanding the implications of such changes on personal finances.
If you are a Barclaycard customer, it is advisable to carefully review the new terms and assess how they may affect your repayment strategy and overall financial well-being.
2024-04-26 01:00:31
Source: www.theguardian.com