Flexi-rate Cardholders Repay More

Barclaycard have released figures that show that their Barclaycard Flexi-Rate customers pay off their balances quicker thus lowering the total amount of interest they pay as their balance have less time to accrue interest.

The Flexi-Rate card, which was introduced to the UK credit card market in October 2005, rewards customers who repay more by levying a lower interest rate against their balances.

Over the last seventh months Barclaycard has been analysing customers repayment habits, revealing that compared with customers who have standard credit cards, half as many cardholders choose to pay the minimum each month. Further more, the amount of Flexi-Rate cardholders who choose to pay more than the minimum payment each month has risen by 10%.

Credit cardholders in the UK have long been urged by financial experts to endeavour to repay more than the minimum each monthly to their credit cards in order to pay off the debt quicker and reduce the amount of interest paid overall.

Making adjustments to credit card repayment behaviour can save considerable money with a cardholder. For example, a cardholder who borrows £1,000 on a credit card with an interest rate of 15.9% and who makes minimum payments each month, will find it would take just over 21 years to pay off the debt, with £1,400 of that debt being interest.

Barclaycard Flexi-Rate rewards as customers who pay more than the minimum repayment each month by charging a lower interest rate. Those who pay more than 10% of their balance each month will subject to an interest rate of 9.9% as opposed to a rate of 16.9% for those who pay less than 5% of their outstanding balance.

James Le Brocq, head of Barclaycard UK Credit Cards, said: “ Flexi-Rate is doing exactly what it is designed to do – that is, encouraging people to pay back any borrowing sensibly. Increasing the amount you pay back each month can dramatically reduce both interest costs and the time it takes to repay.

May has already seen Barclaycard display anew message for customers in the summary box, which will make customers aware of the consequences of making minimum repayments each month. The statement says:

“ We’ve noticed recently you’re only paying the minimum amount; this will increase the time to clear your balance and cost you more in interest. If you wish to discuss your payment, please call Customer Services.”

Alisdair Milton
9th June 2006