Reduced minimum credit card repayment means longer 'debt sentence'
(19 July 2007)

Three and a half million credit card customers could be paying their bills for nearly 30 years if they just make the minimum repayment each month.

Online comparison and switching service uSwitch.com explains that, amid soaring levels of national personal debt and rising interest rates, Barclaycard and Marks & Spencer Money have reduced the minimum monthly repayment level on their cards.

Barclaycard has reduced its minimum repayment from 2.5 per cent to 2.25 per cent, while Marks & Spencer Money has cut its minimum repayment from three per cent to 2.5 per cent.

uSwitch.com reveals that 60 credit card providers have a minimum repayment of two per cent.

Repaying three per cent each month instead of two per cent on the average UK credit card balance of £1,812 could halve the time it takes to pay the balance from 30 years to 15 years, uSwitch.com advises.

Mike Naylor, personal finance expert at uSwitch.com, said: "In an environment of rising interest rates where personal debt in the UK has reached a staggering £1,325 billion, of which credit card debt accounts for £54 billion, consumers could now finish repaying their mortgage before their credit card, despite the huge disparity in sums borrowed."