Yahoo News Martin Lewis issues 'substantial' credit card warning and urges people to 'check now'
Martin Lewis has issued a significant credit card warning that could leave people forking out £955 more than usual, urging followers to 'check now'.
Addressing listeners of his BBC Podcast, he revealed changes being made to the repayment rates by Barclaycard, which could see customers paying off their debt for an additional decade.
According to Mr Lewis, those with typical debt of £1,000 who were making payments at the old Barclaycard rate will be hit with a startling extra £955 under the new regime. He blasted: "It says it is doing it to give customers increased flexibility - I say it is doing it to make more money."
The MoneySavingExpert informed listeners that Barclaycard had begun issuing notifications to clients about the alteration of its minimum repayments, labelling the changes as perilous and shifty: "They are the least that you have to pay your credit card firm each month and these are devious and dangerous and Barclaycard is reducing that."
He advised them that from July 22, Barclaycard would enforce changes to its minimum repayments, cautioning that what seems harmless at first glance could prove harmful in the long run: "If I tell you what it's doing and you look at it, it feels innocuous.", reports Birmingham Live.
"Most people will have ignored it. On most Barclaycards now the minimum you have to repay each month is 3.75 per cent of your balance or 2.5 per cent of your balance plus interest or £5. So you have to pay the highest of those."
"From July that will be 1 per cent of your balance or 1 per cent of your balance plus interest or £5. Doesn't seem that big of a change does it? ".
"For someone who has got £1,000 on a typical Barclaycard - we're talking an APR of 24.9 per cent on the current minimum repayments, if you just make minimum repayment, it would take nine years and eight months to clear in full and that would be a total interest cost of £700."
"On the new minimum repayments taking you from 3.75 per cent to 1 per cent ut would take you 19 years and three months - so a decade longer - and the total interest you pay would increase from £700 to £1,655. Two and a half times as much in interest."
"This is a very substantial warning to the millions of Barclaycard customers - you need to check now if you just pay the minimum repayments and if you do you need to think about changing that."
Martin has issued a call for individuals to lock in their current minimum repayment rates, warning: "Barclaycard's reduction, for many, from 3.75 per cent of the balance to 1 per cent of the balance means while people's repayments will cover their interest, they will clear far less of what they owe, prolonging the debt, keeping people indebted year after year after year, and the interest racking up year after year after year. You pay less each month but you pay more - much, much more over the longer term."
Furthermore, Barclaycard is set to adjust the APR it charges some customers. The APR, which represents the total interest rate paid back annually, will see an increase for certain customers, meaning they'll incur more interest.
Barclays has commented that customers can expect their APR to either remain unchanged or decrease. However, reports indicate that some customers on 'historic rates' may experience an APR hike of up to 9.9 percentage points.
In response, Barclays has stated: "Customers will benefit from a reduction in their minimum monthly repayment and the vast majority have no change to APR, while some will receive a decrease."
