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Ep 74 - Beware reduced credit card payments
Manage episode 414764571 series 3426902
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Millions of credit card customers face a big increase in the cost of their borrowing, but many will not know.
Barclaycard is reducing the minimum payments that customers will be charged from July. Someone owing £2,500 will have a minimum payment of £71. 21 from July down from £89.96 - an apparent saving of £18 a month.
But this move alone increases the cost of paying off balances because customers paying the minimum will be paying the high interest charges for longer.
Not only is the company reducing the monthly payments but it is also increasing the interest rates at the same time by about 15% from 18.71% to 21.59% for example. So not only are cardholders paying for longer, but they are also paying a higher rate of interest.
The cost of paying off card balances could cost thousands of pounds more if minimum payments are made every month. A customer choosing to pay £100 on a £2,500 debt instead of £71.21 would save a massive £3,522.57 in interest.
Pay as much as you can each month or apply for a zero interest card to pay off debts even quicker.
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