Latest Debt News
Credit card initiative receives warm welcome
21/10/2005 14:13:00
A new initiative from Barclaycard to help people pay off debts faster has been given a good reception from industry commentators.
The Flexi-Rate product, to be launched on October 24th, has its interest rate set by how much a customer pays back from their balance. If a borrower pays back the minimum of 2.5 per cent of their credit balance they will be charged 16.9 per cent interest.
But if repayments are increased to a tenth or over, the interest rate falls to 9.9 per cent. Those who pay back 5.05 and 9.99 per cent will receive a rate of 12.9. The company reckons that the flexible rate will encourage people to pay back their debts quicker, reducing the cost of repayments.
Malcolm Hurlston, chairman of the Consumer Credit Counselling Service (CCCS), said that the company had made a move in the right direction: "There has been far too much misleading emphasis - from government and in the media - on APR, which is only one factor.
"In this context Barclaycard's new initiative, together with MBNA's move back towards annual fees, represents a more intelligent approach by lenders which offers consumers a helpful choice."
Others agreed. Moneyfacts.co.uk spokesman Andrew Hagger said: "Anything that encourages consumers to manage their money in a more responsible manner should be seen as a positive step"
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