Money Wellness
Illustration of a hand holding a credit card making a payment
category icondebts
calendar icon26 Apr 2024

Barclaycard change could see customers hit with higher interest

Changes to Barclaycard’s terms could result in it taking a decade longer for customers who only make the minimum repayment each month to clear their debt.

This would also mean they’d pay hundreds of pounds extra in interest charges.

Barclaycard claims cutting minimum payments will give customers “more flexibility”.

But the lender has been criticised for not clearly explaining that paying less will increase the time it takes to clear borrowing and the amount of interest charged.

What's changing?

The changes come into force on 22 July and will apply to all Barclaycard customers.

From that date, instead of generally paying off between 2.25% and 4.25% of their balance, the minimum monthly repayment will be one of the following:

  • 1% of their balance
  • 1% of the balance plus any interest, default fees or account fees
  • the total outstanding balance if it’s less than £5

What does this mean for you?

According to the Guardian, if you have £1,000 of debt on a typical Barclaycard and repay it by handing over the minimum amount each month, you would currently pay £699 in interest. Under the new terms, this will rocket to £1,655.

Under the current rules, it would take you nine years and eight months to clear this debt.

When the new terms come into effect, this will jump to 19 years and three months.

Other lenders

Banks including Santander and NatWest already have similar terms in place.

Struggling with debt?

If you’re struggling with unmanageable levels of borrowing, it could be time to get debt advice.

Our help is available 24/7 online and during office hours over the phone.

We can:

  • check you’re getting all the benefits you’re entitled to
  • help create a realistic budget you can stick to
  • advise you on debt solutions

If a debt solution is suitable for you, it may reduce your monthly repayments to creditors and even write off some or all of what you owe. Our advice is free. Some debt solutions are also free while, for others, there’s a fee. Debt solutions are likely to affect your credit rating.

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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