Barclaycard - increasing minimum payments again - 3.75 percent

[Deleted User]

reg091 said:

3% here. What is really galling is that I only use the card as a 0% interest balance transfer. I moved the balance from a Santander card when their 0% deal ended. I was paying 1% of balance for minimum payment there so was shocked when it more than doubled when I moved it to Barclaycard (2.25%).

Now they are increasing it to 3% it is a real pain. I am not paying interest so don't need to pay it off quicker. Yes, of course it would be better in the long run to get rid of the debt but it isn't costing me any money so it makes sense to "park" it for a while to free up some monthly income.

While it would be nice to keep it low, if you don't get a BT offer when yours ends, you would have to pay it all or pay interest, hence they have to consider what you need to do in order to keep paying your balance down.

I suspect I'll get one too but again I pay off the BT balance with a monthly and they seem quite happy to keep increasing my limit as I keep using it. Like you, I would rather have the money in an account earning income than give it to them 

reg091

I don't know exactly when it happened but there was obviously legislation passed that made lenders responsible for making sure their customers could afford the debt. So instead of people learning the hard way that debt is a bad thing the responsibility has been taken from them. Yes, I know that is an oversimplification but it annoys me that because people are stupid I have to pay more now!

When I was selling my house a few years ago I was struggling to get buyers. Eventually we got a buyer who put in an offer and was really keen. The estate agents (being paid by me to represent my interests) told the guy he couldn't buy the house because he might not be able to make the payments! I went crazy at them! Why should I, or they care, if three months down the line the guy defaults on his mortgage? They said it was their legal duty to do that.

[Deleted User]

reg091 said:

I don't know exactly when it happened but there was obviously legislation passed that made lenders responsible for making sure their customers could afford the debt. So instead of people learning the hard way that debt is a bad thing the responsibility has been taken from them. Yes, I know that is an oversimplification but it annoys me that because people are stupid I have to pay more now!

When I was selling my house a few years ago I was struggling to get buyers. Eventually we got a buyer who put in an offer and was really keen. The estate agents (being paid by me to represent my interests) told the guy he couldn't buy the house because he might not be able to make the payments! I went crazy at them! Why should I, or they care, if three months down the line the guy defaults on his mortgage? They said it was their legal duty to do that.

The FCA rules on responsible lending I think were last year, anyone in persistent debt i.e. paying loads of interest and not clearing the balance due to paying the minimum only had to be given the option to increase payments or close the card

eskbanker

Deleted_User said:

The FCA rules on responsible lending I think were last year, anyone in persistent debt i.e. paying loads of interest and not clearing the balance due to paying the minimum only had to be given the option to increase payments or close the card

The new rules were announced in February 2018, for implementation by that September:

https://www.moneysavingexpert.com/news/2018/02/new-credit-card-rules-to-help-those-in-persistent-debt/

https://www.fca.org.uk/publications/policy-statements/ps18-04-credit-card-market-study

[Deleted User]

Wow even older then, time flies!

I thought the persistent debt posts on here started last year, wonder if banks were just sluggish to start poking people along or people just didn't take action, forcing the action.

I use a spreadsheet for every transfer I have running, with a simple sum that I can tweak to ensure the minimum amount possible is paid every month that will still clear the balances before they end.

eskbanker

Deleted_User said:

I thought the persistent debt posts on here started last year, wonder if banks were just sluggish to start poking people along or people just didn't take action, forcing the action.

There would have been a lag of 18 months, as it's only once someone has satisfied the criteria for that period that they're deemed to be in persistent debt.

Thrugelmir

Deleted_User said:

I thought the persistent debt posts on here started last year, wonder if banks were just sluggish to start poking people along or people just didn't take action, forcing the action.

To impose significant cultural change takes time. Even the providers need to be prodded. 

paul_c123

By definition, if the min payment is defined as x% of the balance + interest + fees + charges, it is not in persistent debt. It would be interesting to know which credit cards still have "old" min payment definitions where interest isn't included, which could theoretically lead to persistent debt if the interest (as a monthly figure) was higher than the % of balance to be paid.

eskbanker

paul_c123 said:

By definition, if the min payment is defined as x% of the balance + interest + fees + charges, it is not in persistent debt.

If the x% of the balance is outweighed by the interest, fees and charges (over 18 months), and that's all that's being paid, then that's the definition of persistent debt - obviously that's more likely if x = 1 than if x = 3, but certainly possible under both (if a card is over 36% APR then the interest will exceed a monthly 3% balance reduction).

[Deleted User]

paul_c123 said:

By definition, if the min payment is defined as x% of the balance + interest + fees + charges, it is not in persistent debt. It would be interesting to know which credit cards still have "old" min payment definitions where interest isn't included, which could theoretically lead to persistent debt if the interest (as a monthly figure) was higher than the % of balance to be paid.

Why create your own definition?
The FCA one is perfectly simple:

Persistent debt is where, over a period of 18 months, you've paid more in interest and charges than you've repaid of the amount borrowed.

If you're paying the minimum and not clearing the debt and you've been in that situation for a long time, you need to take action, people weren't doing it so the regulator steps in