Tymit, the new credit card firm, is calling on big credit card providers to give every customer more transparency and control over their borrowing.
According to Tymit’s own research, one in 10 (11%) cardholders make their minimum payment every month, with this almost doubling (21%) for those aged 18-34.
Martin Magnon, founder and chief executive of Tymit, alleged that the minimum payment was designed to drag repaying out and boost profits. He said: “Not only does it cost the customer more in the long run, it can create a vicious cycle that sees them get stuck on a growing balance. Things can quickly get out of control from there.”
Tymit is calling on “big credit” to commit to doing three things:
Magnone said: “We’re calling time on unfair credit. For transparency and control, the traditional credit card doesn’t cut it. With Covid sharpening our focus on financial wellbeing and pressure building for better regulation of consumer credit, we have an opportunity to make it fairer.”
Tymit surveyed 2,000 nationally representative UK adults in November 2020. Tymit’s research found that almost two thirds (63%) of cardholders across the survey don’t know it’s a form of revolving credit and 14% think it isn’t. The majority (63%) also don’t know or get it wrong when it comes to their understanding of compound interest, with those in the 18-34 age group (75%) most unsure.
The study also reveals that eight percent of credit card owners it surveyed have been hit by unexpected interest and charges, with the figure climbing to 13% for younger cardholders (18-34).
“Burying tricks in the fine print so you can catch people out with hidden fees and temporary 0%-interest deals is two-faced, but it’s also a major trust killer and one of the reasons why credit cards have gotten a bad reputation,” said Magnone.
Earlier this month, the Insolvency Service proposed changes to the eligibility criteria for debt relief orders which should give more people in problem debt access to this solution.