cancelling a barclaycard

cross22

I have a barclaycard i don't use anymore , but i still have money to pay back (am only paying minimum each month) and the intrest is more than what i am paying . if i was to cancel it would i have to pay it all back now or would i be able to set a payment plan with them and would it stop the interest being charged every month

[Deleted User]

You would pay it back under the terms of the agreement. So at least minimum payment each month. Interest will still be charged.

grumbler

cross22 wrote: »

I ...(am only paying minimum each month) and the intrest is more than what i am paying .

AFAIK, a minimum payment must be bigger than the interest (plus charges if any).

Aquamania

cross22 wrote: »

I have a barclaycard i don't use anymore , but i still have money to pay back (am only paying minimum each month) and the intrest is more than what i am paying . if i was to cancel it would i have to pay it all back now or would i be able to set a payment plan with them and would it stop the interest being charged every month

Are you sure about that?


According to my Barclaycard statement the minimum payment is the highest of:

• 2.00% of the amount you owe
• £5.00 (or the entire amount if less)
• Interest since your last statement plus 0.10% of the remaining balance (after interest and charges)

I don't think they will close the account unless you pay back all you owe ... but they may agree to suspend it to prevent you spending any more on the account. Interest will still accrue until you settle the account.

chattychappy

I agree something sounds wrong.

In any case, try always to at least pay £1 more than the minimum. This avoids the "minimum payment" marker on your credit file.

YorkshireBoy

chattychappy wrote: »

I agree something sounds wrong.

The minimum payment shown on any particular statement has to at least cover the interest charged on that same statement...not the interest that will accrue from that date until the date of the next statement.


The statement will contain an "estimated interest next statement" figure, which will be based on no further transactions being made and them receiving the minimum payment on the due date.


It's entirely possible that the debt can increase over time if you only make minimum payments...even on a card that's not being used, and especially if any of the balance was due to cash transactions.

chattychappy

YorkshireBoy wrote: »

The minimum payment shown on any particular statement has to at least cover the interest charged on that same statement...not the interest that will accrue from that date until the date of the next statement.

[...]

It's entirely possible that the debt can increase over time if you only make minimum payments...even on a card that's not being used, and especially if any of the balance was due to cash transactions.

I think mathematically that would be true if indeed the minimum repayment was set at just a tad above interest for the month (as per lending code rule 129 which says the minimum should be at least the interest). In most practical cases, the repayment rules should ensure this shouldn't happen because also according to the Lending Code:

130. The principle should be that the minimum repayment on a credit card should reduce month by month if there have been no further transactions on the card and the lower minimum payment threshold of the card has not been reached,assuming all other conditions of the product remain unchanged. The term ‘transactions’ includes any fees, charges or PPI premiums incurred on the card.


(also rules 131-133 taken together).

grumbler

YorkshireBoy wrote: »

It's entirely possible that the debt can increase over time if you only make minimum payments...even on a card that's not being used, and especially if any of the balance was due to cash transactions.

I don't see why this can happen especially if the card isn't used. For cash transactions the interest will just be higher.

ybbon66

Some numbers would help.

How much do you owe on this card?
What are you paying each month?
What can you actually afford to pay on that card each month?

chattychappy

grumbler wrote: »

I don't see why this can happen especially if the card isn't used. For cash transactions the interest will just be higher.

I think YB's logic is that you have interest on interest. Let's say you have £1000, interest is 2% a month, and you get a month to pay. (Pretty much the case with my Barclaycard - the due by date is just before the next statement date.)

Jan 1st - balance £1000 + £20 interest = £1020
Jan 31st - you pay £20 interest, so balance now £1000.
Feb 1st - balance = £1000 + £20.40 interest = £1020.40
Feb 28th - you pay £20.40, so balance now £1000.
Mar 1st - balance £1000 + 20.41 interest, so balance now £1020.41
etc

I think the effect is only really a mathematical one and it soon tails off - unless YB was thinking of something I've missed.

But in any case, the Lending Code establishes the principle that the minimum payment formula should cause the balance to fall over time.

I'm guessing that the OP does have some transactions in there, or that it is the odd transient effect caused by statement dates moving around a little.

reclusive46

grumbler wrote: »

I don't see why this can happen especially if the card isn't used. For cash transactions the interest will just be higher.

On some older cards the minimum repayment was sometimes just 1% regardless of interest or anything like that. Many of these cards never had their terms and conditions changed.