Barclaycard is raising the minimum payments for some customers, in a bid to help them get out of debt quicker.
The increases have been capped for each customer, and if the new calculation would see a customer pay a significantly higher amount than they are currently repaying, then they will be excluded from the changes.
The lender explained that Barclaycard customers will be paying less interest overall and getting out of debt faster. The lender added that as the customers will pay less in interest, Barclaycard will be generating less revenue. The new repayment rates will affect those with Platinum, Initial, Freedom, Forward, Cashback, Littlewoods, Rewards and Hilton Honors cards, from January 26.
The new structure means minimum payments will be the highest of one of the following:
Barclaycard has also introduced a 56 day interest-free period on cash transactions and purchases and is scrapping the £12 charge for exceeding the credit limit.
The lender’s late payment fee is also being changed. Instead of being charged £12 for every month the payment is late, customers will only be charged this fee a maximum of four times a year.
The move comes after the FCA instructed credit card firms to review persistent debt policies.
A Barclaycard spokesperson said: “Barclaycard is a responsible lender, committed to achieving positive outcomes for its customers. We are increasing minimum payments for some customers to help them pay off debt quicker, and reduce the overall interest they pay.
“This is part of our ambition to ensure that no Barclaycard customer gets into persistent debt – where they pay more in interest and charges than reducing their debt, and take a long time to pay this debt off - and is being put in place to support our customers.”
Earlier this month, a credit card firm challenged big credit card providers to provide customers with more control and transparency over borrowing.