Barclaycard borrowers could see debt last for decades

Former_MSE_Guy · 25 June 2009 at 10:37AM

This thread is to discuss the following news story:

Barclaycard borrowers could see debt last for decades

IWantToBeFree_2 · 25 June 2009 at 10:47AM

I don't see the issue with this, if people are stupid enough to not realise that by only paying the minimum payment they will spend ages paying off the debt then thats their own fault!

_Andy_ · 25 June 2009 at 11:08AM

We've seen on this forum time and time again that the lenders just can't win - if they make the minimum payment higher, people complain that they're too harsh etc... if it's reduced then of course the lender is 'taking advantage' etc.

I don't see the problem - if people feel the new payment is too small then just pay extra. But of course that would mean (shock) taking some responsibility.

nzseries1 · 25 June 2009 at 11:08AM

It's another case of if banks lower the minimum payment, they are accused of prolonging people's debt. They raise the minimum payment, then people complain they can't afford it.

Banks just can't win.

They already state "If you pay only the minimum payment, it will take longer and cost more to clear your debt" or words to that effect. What more do people expect?

As a responsible borrower, I think a lower minimum payment is BETTER because that allows me to budget how I want. Good on you Barclaycard.

EDIT: Andy, posted the same thing at the same time :-) glad I'm not alone!

PROLIANT · 25 June 2009 at 12:18PM

What Andy and nzseries1 said...

ILW · 25 June 2009 at 12:31PM

I cannot see that this is bad news. People can choose how much they want to pay each month.
I get the impression that some of the people that run this forum (Guy?) have an attitude that anything the banks do is automatically wrong. This tends to muddy the waters about true wrong doing and I think a little more balance should be shown.

Former_MSE_Dan · 25 June 2009 at 1:22PM

Hi folks,

Just reading this interesting discussion, and wanted to reiterate the MSE standpoint on this.

We have always thought that Minimum repayments as a mechanism are a bad thing, as they are designed to keep cardholders perpetually in debt, and have a longstanding MSE guide - http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card - encouraging anyone with debts on a card to look at their payment and pay more than the minimum if possible.

We've never campaigned for lower, or higher minimum payments, as we believe the whole system is a bad one.

However, some cardholders do only pay the minimum, and this change by Barclaycard will hit some of them. The point of the news story is to make people aware, and point out the potential cost.

We take everything the banks do on each measure's individual merit, and appreciate that some forumites will agree and some will disagree; that's the great thing about the forum!

Dan

ILW · 25 June 2009 at 2:45PM

MSE_Dan wrote: »

Hi folks,

Just reading this interesting discussion, and wanted to reiterate the MSE standpoint on this.

We have always thought that Minimum repayments as a mechanism are a bad thing, as they are designed to keep cardholders perpetually in debt, and have a longstanding MSE guide - http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card - encouraging anyone with debts on a card to look at their payment and pay more than the minimum if possible.

We've never campaigned for lower, or higher minimum payments, as we believe the whole system is a bad one.

However, some cardholders do only pay the minimum, and this change by Barclaycard will hit some of them. The point of the news story is to make people aware, and point out the potential cost.

We take everything the banks do on each measure's individual merit, and appreciate that some forumites will agree and some will disagree; that's the great thing about the forum!

Dan

Sorry Dan, but you seem to have made a rather odd statement that "minimum payments as a mechanism are a bad thing". They are purely voluntary so this does not seem to make a lot of sense. Would you prefer maximum payments?

Former_MSE_Dan · 25 June 2009 at 3:02PM

Hi ILW,

Sorry maybe that wasn't very clear; I mean setting the MMR as a percentage, so that it decreases in actual amount each month, keeping you in debt for longer, is a bad thing. Paying off a fixed amount that you can afford costs far less over the life of the balance.

Dan

td_007 · 25 June 2009 at 3:07PM

I would second Dan's statement "minimum payments as a mechanism are a bad thing". Minimum payments provides that psychological crutch to people thinking "I need to pay only this much this month" and ignore that the fact they will pay a lot more over a long period time. If minimum payments were increased to to say 20-30% or even more of the outstanding amount people will stop and think how will I pay it back? It is much easier to pay back £5 rather than £30 on a £100 spend. While there will be a subset of people with genuine difficulties, there are a lot who refuse to take responsibility for their overspending and cling on to min repayments - no wonder UK is in a debt black hole.

ILW · 25 June 2009 at 3:18PM

Maybe set higher percentage minimum payments for people with a poor credit history. I dont see why the majority should suffer for the idiocy of the minority.

Barclaycard borrowers could see debt last for decades

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