Barclaycard fast payment 'reward'

Fedz

Barclaycard fast payment 'reward'

A credit card which aims to reward people with lower interest rates if they
pay off their balance quickly is being tested by Barclaycard.

Repayment Rewards is the second product Barclaycard has tried out this year
which it claims encourages a more sensible approach to credit.

The card works by linking the interest rate charged on purchase balances to
the percentage of the balance repaid each month.

But comparison website Moneyfacts has dismissed the credit card as
"gimmicky and complicated" and said people are better off on a 0% deal.

Barclaycard is keen to promote itself as a responsible lender. Speaking to BBC
Radio 4's Money Box programme, Barclaycard's Ian Barber said: "We carry
warnings on all our statements that if you only make the minimum payment
each month, that debt is going to stay around for much longer."

But the Repayment Rewards card still allows people to do just that, despite
its claim of encouraging a responsible approach to borrowing.

If a Barclaycard Repayment Reward customer with a £1000 debt paid the
minimum repayment of 2.5% each month, with an APR of 16.9%, they would
end up paying £950 in interest.

However, if the customer paid 10% of their balance each month, with an APR
of 9.9%, they would they would pay just £150 interest.

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Quasar

I pay my c/c balances in full each month. I expect this does not really make me a good customer for them because they ain't making any interest money from me.