Martin Lewis on what Barclaycard minimum payment change means for credit card holders | Personal Finance | Finance
As well as talking about some pressing issues in terms of financial support during the coronavirus pandemic and answering questions from members of the public, Martin Lewis informs ITV viewers of a range of money issues during his News You Can Use segment of the show. Tonight, this included a warning for Barclaycard holders.
“This is good news – you’re going to pay more each month and that means you’ll pay less interest and clear the debt quicker.”
On the flip side though, Martin continued: “This is bad news – you’re going to pay more each month, so therefore it hits your cash flow.
“If you can’t afford it, or you’re struggling, speak to Barclaycard. [I’m] not saying they will do anything, [but] they may be able to.
“In general, I would always try and pay more than the minimum payment otherwise you pay a lot in interest.”
There is a caveat however, and this is relevant to people who have other forms of debt.
“Unless you’ve got another debt that’s more expensive in which case just pay the minimum repayment on this and maximise it elsewhere,” he suggested.
“So that move may affect your cash flow. It’s worth working out what’s happening.
“It’s happening this week, you may have to stop paying more on your Barclaycard if you’re on minimum repayments.
Barclaycard first notified customers it would be changing the way in which it calculates minimum payments back in November last year.
The change however will begin being seen by customers from this week.
Commenting on the change, Steve Wiley, CEOat Monva, said: “A five percent minimum repayment used to be the standard for credit card repayments in the UK before the American banks arrived in the 1990’s who over time lowered it to one percent.
“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 percent) accumulated a new year debt equating to £4.1billion over the festive period and 40 percent are unsure how they plan to pay back the debt.
“Despite the pandemic and lockdown reducing the ability to spend money on everyday items, Brits have found themselves in a tricky position in January, with no clear plan to pay back their debt.
“For those who will struggle with Barclaycards increased repayment, they should consider switching to MBNA or Santander who offer one percent minimum repayment, or HSBC who offer 2.5 percent minimum repayment.
“When comparing new offers, customers should always use an eligibility checking service to ensure no risk to their credit file.”
The Martin Lewis Money Show Live airs Thursdays on ITV from 8.30pm.