Personal finance expert Martin Lewis has sounded the alarm for Barclaycard users over a “worrying” change that could see interest payments soar. Speaking recently, the Money Saving Expert founder highlighted a significant alteration in Barclaycard’s policy set to kick in from July 22.
Mr Lewis pointed out that Barclaycard is slashing the minimum monthly repayment amount for many customers, which although may seem minor, could have major implications on the total interest paid. He cautioned: “Barclaycard customer? WARNING, it’s cutting your minimum repayment, this sounds trivial but it could DOUBLE the total interest you repay.”
In a communication to its customers, Barclaycard described the adjustment as offering “gives you more flexibility with your monthly payment” and stated that the aim is “to ensure customers are treated as fairly as possible”.
On his Money Saving Expert website, Mr Lewis wrote: “This is a worryingly under-the-radar change by the UK’s biggest credit card provider. Changing minimum repayments looks innocuous, even trivial most customers will, I suspect, have ignored it.”
He continued to express his concern, saying: “Yet this seemingly technical and bland change is a huge danger signal. I wish I could light up the sky with neon signs shouting that, for those unaware, if paying interest on their credit card debt, it can easily DOUBLE the total cost of debt by the time you clear what you owe, meaning you pay £100s or £1,000s more.”, reports Wales Online.
“Minimum repayments have always been credit card firms’ secret weapon. Letting people repay little looks appealing hence why Barclaycard says this is about ‘flexibility’. Yet it takes flexibility to kick your own backside, and this will hurt some just as much.”
“Barclaycard’s reduction, for many, from 3.75% of the balance to 1% of the balance means while people’s repayments will cover their interest, they will clear far less of what they owe, prolonging the debt, keeping people indebted year after year after year , and the interest racking up year after year after year.”
“I would urge ALL Barclaycard customers to sit up, take note of this, and check now if you only pay the minimums. If so, unless you’ve other, even costlier debt you’re clearing first, if you can’t afford to repay in full each month, try to make a FIXED monthly repayment based on what you can afford even if it’s the same amount as your current minimum rather than letting your repayments decrease as you owe less.”
“This can radically reduce the length you’re in debt and the interest cost. The more you can repay, the less interest you’ll be charged.”
