Related Credit Card Article

"Reduced minimum repayment levels could mean years of debt"

By admin | February 12th, 2008 | General

Recent reports have suggested that a number of credit card companies are looking to reduce their minimum repayment levels, which are already at an average of 2.65% of the balance. Some credit card companies charge only 2% of the outstanding balance. However, campaigners are now up in arms about this issue, stating that this is another cunning way for credit card companies to make vast amounts of profit from interest repayments and keep customers in debt for years to come.

One official from uswitch stated that customers that decided to stick with the minimum repayment could end up making repayments for 30 years on a relatively low balance of less than £2000 – and could also end up paying several thousand pounds in interest over that period.

He added that in many cases consumers making the minimum repayment could see their mortgage cleared before their credit card. He stated: “In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325 billion, of which credit card debt accounts for £54 billion, consumers could now finish repaying their mortgage before their credit card, despite the huge disparity in sums borrowed.”

Consumers are being urged to try and make even slightly more than the minimum repayment wherever possible in order to reduce the time over which they will be in debt, which could effectively be slashed even with a slightly increased payment. Uswitch have stated that credit card companies do not make the implications of making only minimum repayments clear enough to customers, and that many consumers that are making minimum repayments have no idea how long they will be in debt for.

Tags: debt, balance, minimum repayments

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