Halifax CC T & C's

thriftymomma

I just got a change of T & C's that I don't normally look at but they have reduced the minimum payment to 1% of the balance, instead of 2.5 or whatever it was. What does that mean to me? Or is it just a sneaky way of making me stay in debt longer - I don't pay minimums btw.
Just wondered why they would do this?

NickX

Yep probably doing this to ensure your debt doesn't decrease too quickly.

Could be handy if you get a nice 0% deal though :beer:

clio

If you were only to pay the min payment that decrease would keep you in debt longer meaning more cash in thier pockets..

bert&ernie

I believe that many issuers have or are about to change their minimum payment calculations. At the moment, most charge a flat percentage of the balance or a fixed value minimum if this is greater e.g. 2.5% or £5.

I'm not sure of the details (perhaps the OP could check their notice of variation) , but the changes will be to something like interest + 1% of balance or £5 - whichever is greater. This will ensure that balances reduce even if the interest rate is very high, yet reduce even slower on low or 0% intro periods.

As previous posters have mentioned, the goal of the lender is to keep you in debt for as long as possible. However, they don't want the accounts to negatively amortize.

NickX

bert&ernie wrote: »

the changes will be to something like interest + 1% of balance or £5 - whichever is greater. This will ensure that balances reduce even if the interest rate is very high, yet reduce even slower on low or 0% intro periods.

This makes sense actually.

With some of the interest rate hikes of late, people paying the minimum could be paying less than the accrued interest for that month.

By charging "interest + 1%", they can hike the rate up to whatever they like and people's balances would still have to decrease by paying the Minimum Payment.

bert&ernie

Precisely - they don't want you to repay the capital, but they need to make sure that you at least pay the interest. I'm not sure, but I think this may due to CCA 2006 changes that require lenders to prevent negative amortisation.

jonesMUFCforever

Some people will be on rates like 26.9% APR which works out more than 1% per month??

bert&ernie

jonesMUFCforever wrote: »

Some people will be on rates like 26.9% APR which works out more than 1% per month??

Please review my posts. I don't think the OP is entirely correct - I believe the new min pay calculation is interest charged + 1% of outstanding balance.

Simply changing the min pay from 2.5% to 1% would indeed cause a large number of accounts to negatively amortise - its highly unlikely to be correct

Perhaps the OP or someone who has had a notice of variation can confirm.

thriftymomma

Hiya, the specific wording
Each month, if the balance is £5 or more, you must repay the greater of
a) 1% of the amount you owe us(halifax)
or
b)an amount equal to the total of any credit card repayments cover premiums, interest(or the minimum interest charge), overlimit and late payment fees + £5

thriftymomma

bump up my post

thriftymomma

bumping one more time!