Minimum repayments lowered

Many credit card customers will take the opportunity to pay only the minimum of their outstanding balance, making it hard for them to climb out of debt according to an Individual Voluntary Agreement (IVA) expert.

Following the news that Barclaycard will lower its minimum repayment limit, Iva.co.uk, a website set up to help people understand debt and debt solutions, warned customers against paying back only the minimum.

Andy Davie, Iva.co.uk spokesman said: "When you get your credit card statements at the end of the month, it’s always more than you expect it to be.

"And then if there’s the option there of a low payment, nine out of ten people are going to take that option and think: ‘well, next month I’ll pay more off it’, but of course that never happens, does it?"

As a result, people can end up paying more in interest than they borrowed in the first place and get saddled with years of debt.

Barclaycard’s reduction of the minimum repayment from 2.50 per cent to 2.25 per cent could add four years to the repayment time of a borrower with a £3,000 loan on 17 per cent APR.