Martin Lewis warns Barclays customers of 'under-the-radar' card payments change

One of the UK's biggest banks is changing the way that millions of its customers repay their debts each month, with minimum payments of just £5 for all Barclaycard customers coming in this July. But, although this might sounds good for people struggling with debt, financial guru Martin Lewis has warned this "technical" change, is actually a "huge danger signal."

From July 22, Barclaycard holders could see their debt payments drop, but it could mean paying the bank thousands more in interest. Many customers struggling with the cost of living will have their monthly repayments set to the minimum, from July this will only cover the interest payable on the debt, which could leave people paying off their debt for up to a decade longer than expected.

Barclays have said the change "gives you more flexibility with your monthly payment". But Mr Lewis, founder of MoneySavingExpert.com, said: "This is a worryingly under-the-radar change by the UK's biggest credit card provider. Changing minimum repayments looks innocuous, even trivial – most customers will, I suspect, have ignored it."

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From July 22, all Barclaycard customers, including Platinum or Rewards cards, will have to pay back the highest of one per cent of your debt, or 1 per cent of total balance including interest, or just £5. Previously this was 3.75 per cent of your debt, or 2.5 per cent of your balance.

However, according to calculations by the Money Saving Expert, a customer paying off a £1,000 debt under the new system would pay almost £1,000 more in interest to Barclays than under the old system. It would also take twice as long to pay it back, with it taking around two decades to clear the debt.

Mr Lewis continued: "Yet this seemingly technical and bland change is a huge danger signal. I wish I could light up the sky with neon signs shouting that, for those unaware, if paying interest on their credit card debt, it can easily DOUBLE the total cost of debt by the time you clear what you owe, meaning you pay £100s or £1,000s more.

"Minimum repayments have always been credit card firms' secret weapon. Letting people repay little looks appealing – hence why Barclaycard says this is about 'flexibility'. Yet it takes flexibility to kick your own backside, and this will hurt some just as much.

"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."

"I would urge ALL Barclaycard customers to sit up, take note of this, and check now if you only pay the minimums. If so, unless you've other, even costlier debt you're clearing first, if you can't afford to repay in full each month, try to make a FIXED monthly repayment based on what you can afford – even if it's the same amount as your current minimum – rather than letting your repayments decrease as you owe less.

"This can radically reduce the length you're in debt and the interest cost. The more you can repay, the less interest you'll be charged."

The Money Saving Expert advises that the aim with any debt "should always be to repay it as quickly and cheaply as possible." Using the same £1,000 debt as an example, paying a fixed £29 every month, rather than the minimum £5, would clear the debt in four years and eight months, while paying £1,000 less in interest.