Barclaycard is making changes to its credit cards that could see customers' minimum repayments rise from tomorrow (26 January).
Platinum, Initial, Freedom,
Forward, Cashback, Littlewoods, Rewards and Hilton Honors credit card customers will be affected by the
update.
The changes were announced back in November, and have been introduced to help those who are stuck in 'persistent debt'.
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Persistent debt is the term used to describe when someone is paying back more in interest, fees and charges over 18 months than they have paid towards reducing the amount borrowed.
Under rules from the Financial Standards Agency (FCA), banks must send out letters to customers who are in persistent debt for 18 months to warn them.
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If there's no change in the next 18 months credit card providers must then offer customers a repayment plan to help them pay off what they owe.
Barclaycard's new changes will recalculate how the minimum repayments are worked out and will be personalised to the individual customer but will be the highest of three calculations, Which? reports.
So, you'll either pay:
- 2-5 percent of the main balance (plus any instalment plan fees);
- 1-3 percent of the main balance plus any interest, default fees or account maintenance (plus any instalment plan fees);
- or £5, or the total outstanding balance of an account if it is less than £5.
The old Barclaycard rules meant customers either paid 2.25 percent of the full balance, one percent of the balance plus interest or a fiver - meaning the newer repayments are slightly higher than the old ones.
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Barclaycard says most customers are already paying more than their minimum repayments so these new rules won't impact them.
As well as the changes to how minimum payments are worked out, Barclaycard is also getting rid of its £12 fee for customers who go over their credit limit.
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And late payment fees can only be charged a maximum of four times a year - at £12 a pop, to a maximum of £48 per year.
But be warned that if you do go over your limit or miss a payment your credit score could be affected.
Barclaycard will also block any purchases or transaction on gambling websites or betting shops - so if you attempt to use your card to gamble, the payment simply won't go through.
If you're struggling to pay debts off, there's plenty of help available - you can get in touch with National Debtline here or go to Citizens Advice.
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It's also a good idea to get in touch with your bank and tell them you're struggling with repayments
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