Barclaycard changes its minimum repayment

Barclaycard customers face increased minimum repayment amounts as Barclaycard changes came into effect this week.

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In November 2020, Barclaycard communicated to customers they’d be increasing the minimum repayment amount on their credit cards via a notice titled “changes to your terms and conditions”.

This change is tailored to each individual customer, and so the amount is likely different from person to person, but some may see a significant increase in their minimum repayment amount.

The new repayment rates have not been applied to all of Barclaycard’s offering. Platinum, Initial, Freedom, Forward, Cashback, Littlewoods, Rewards and Hilton Honor card customers will be impacted to a varying degree. But, customers of Premier or Woolwich cards will see no changes.

Barclaycard has not announced the number of customers that have been impacted by this change, nor what the average change is. What we do know is, no customer will see their minimum repayment amount decrease due to the changes made.

There are three calculations to provide a minimum repayment amount:

  1. 2-5% of your main balance (percentage will vary by customer) - this does not include any instalment plan payments.

  2. 1-3% of your balance plus interest (percentage will vary by customer) - as with the above calculation, this does not include any instalment plan payments

  3. £5, or the remaining balance if the total is less than £5 - this isn’t new.

Barclaycard will base the repayment on whichever calculation produces the highest repayment amount.

Barclaycard has said this change won’t affect most customers as the majority of Barclaycard credit card customers already pay more than minimum amount each month.

A Barclaycard spokesperson has said:

We are increasing minimum payments for some customers to help them pay off debt quicker and reduce the overall interest they pay.

This is part of our ambition to ensure that no Barclaycard customer gets into persistent debt - where they pay more in interest and charges than reducing their debt and take a long time to pay this debt off - and is being put in place to support our customers.

When approached for comment our CEO and founder, Steve Wiley, said of the changes:

It’s actually a responsible thing to do to help with increasing the speed in which debt can be repaid, but bad timing given the pressures people are facing with repayments in the current environment.

We know from our data that over a third of UK adults (36%) accumulated a new year debt equating to £4.1billion over the festive period and 40% are unsure how they plan to pay back the debt.

For those who will struggle with Barclaycards increased repayment, they should consider switching to MBNA or Santander who offer 1% minimum repayment, or HSBC who offer 2.5% minimum repayment.

When comparing new offers, customers should always use an eligibility checking service to ensure no risk to their credit file.

What other changes have Barclaycard announced?

The changes aren’t limited to minimum repayment amounts. Barclaycard has also announced other changes:

  • Interest on cash withdrawals - as long as you pay off your balance in full you won’t be charged interest. From 26 January, you’ll only be charged interest on cash withdrawals that haven’t been repaid from your last statement. The interest charged will be at the same rate as your usual spending on your credit card.

  • Credit limit fees - Barclaycard will no longer charge a £12 fee for exceeding your credit limit. You’ll also no longer lose any promotional rates if miss a payment or go over your credit limit.

    However, it’s important to know that missing any payments or exceeding your credit limit can still have consequences to your credit report making it more difficult (or more expensive) to borrow in the future.

  • Late payment fees - there is now a limit on the number of times you’ll be charged a late payment fee. Late payment fees are £12, however, effective from 26 January you’ll only be charged a late payment fee a maximum of four times a year.

    Meaning you won’t pay any more than £48 a year on late payment fees.

  • Gambling transactions - the final change to Barclaycard’s terms and conditions was a new block on any transactions made at a gambling establishment or on a gambling website. If you try to use your Barclaycard card, the payment won’t go through.

What you can try if you’ll struggle with your new minimum repayment

It’s important to know that for many, higher repayments will be a good thing - overall they’ll reduce the amount of interest you pay on your balance and it’ll help you to clear your debt quicker.

However, for some, this change may mean you are unable to afford your new minimum repayment. There are options available to you try:

  • Make a complaint to Barclaycard - contact them directly via online banking, their app or by calling them on 0800 151 0900. We’d recommend contacting them as soon as possible and being open and honest about your situation. We can’t guarantee the actions Barclaycard will take to assist you, however, Barclaycard has said minimum repayments won’t go up if it means a “significantly large” increase to repayments.

  • Look into a balance transfer credit card - this could reduce the overall interest you pay and depending on the credit card provider, could significantly reduce your minimum repayment amount.

If you are struggling with debt and you need more advice and support, there is help available.

If you’re struggling on your own to get your finances back on track, there is support available to you and it’s important to get help quickly before it escalates.

Talking to a non-profit agency, such as Citizens Advice, StepChange and National Debtline are the best place to start. These services are free to use and they’re able to talk to you about your individual situation and explain the options available to you.

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Author: mo


Category: News

Tags: Credit Cards