Barclaycard & minimum payments

Ergates

Hopeless_Case wrote: »

We were planning to just make the minimum payments on the 0% balance and put the rest in an ISA, and then pay it off in full just before the end, but we'll make sure that we pay a bit more to avoid this happening again

This won't happen on a 0% card.

The regulations don't actually apply to people making minimum payments as such. They apply to people where over the last 18 months, interest, fees and charges account for more that half the payments made. (i.e you're paying back more in interest than off the balance).

If you're on 0% interest, then this won't happen. It also means that a standing order to pay £1 over the minimum might not avoid it (it depends on how minimum is calculated).

Dobbibill

For those setting up standing orders for their payments be cautious as the payment due date will change on your credit card but not on your standing order, you don't want to miss the due date by a day or something minor like that and face a penalty.....just a heads up!

Hopeless_Case

Ergates wrote: »

This won't happen on a 0% card.

The regulations don't actually apply to people making minimum payments as such. They apply to people where over the last 18 months, interest, fees and charges account for more that half the payments made. (i.e you're paying back more in interest than off the balance).

If you're on 0% interest, then this won't happen. It also means that a standing order to pay £1 over the minimum might not avoid it (it depends on how minimum is calculated).

Oh thank you, yes of course that makes sense!

sonuenjoys

Its not an account closure letter. It is just an advisory letter which states that you need to make payments slightly more than the minimum payment to pay off your balance quicker and also to accomodate interest and fees because a big chunk of your minimum payment is swallowed by interest and fees.

The minimum payment for majority of accounts is the highest of :
A) 5 pounds
2.25% of the balance
C) 1% of principal balance + interest + fees

Therefore, if you look at option C, you are paying hardly anything off the principal amount. This is why Barclaycard has issued the letter.

Once you are over the limit due to low payments and interest accumulation combined with fees, your account will be terminated.

Thanks