Consumers warned over minimum credit card repayments

Consumers are being urged by industry officials to be wary about making only the minimum repayment on their credit cards, with industry officials stating that by making such small repayments on their balances many borrowers could find that they spend most of the rest of their lives repaying a relatively modest card debt.

A number of credit card firms have recently made changes to their minimum repayment requirements, allowing consumers to make even small minimum repayments, which means that the consumers will pay far more in interest and it will take way longer for the debt to be paid off. Halifax and MBNA are amongst those that have recently made such changes.

With regards to the Halifax credit card changes in relation to minimum repayments, one industry expert said: ‘Complex changes to terms and conditions can cause confusion. On closer inspection, it doesn’t seem that all customers will benefit from this change and some people would be better off under the old minimum repayment.’

An official from another credit card provider, MBNA, said: ‘We would never encourage someone to pay off just the minimum, and this is clearly stated on the customers’ statement – it will take them longer to pay and cost more in interest. The minimum is just that, the minimum amount to fulfill your contractual obligations. Customers have the option to pay anything from the minimum up to the full balance.’