Barclaycard Flexi-Rate Encourages Cardholders to Repay More

Flexi-Rate™ was launched in October 2005 and Barclaycard has analysed repayment behaviour over the past seven months. The figures show that, compared to a standard card, half as many customers are habitually making only the minimum payment. What’s more, the proportion of customers choosing to repay more than the minimum each month has risen by 10 per cent.

Changing repayment behaviour saves money, for example, a customer borrowing £1,000 on a credit card (15.9% APR) and repaying just the minimum each month would take 21 years and three months to repay and pay £1,400 in interest. The same £1,000 borrowed on Flexi-Rate™ and re-paid at 10% per month would take 4 years and 6 months and cost £110 in interest, a saving of £1,290.

James Le Brocq, Head of Barclaycard UK Credit Cards commented: "Flexi-Rate™ is doing exactly what it was designed to do – that is, encouraging people to pay back borrowing sensibly. Increasing the amount you pay back each month can dramatically reduce both interest costs and the time it takes to repay."

To further encourage customers to repay more than the minimum, Barclaycard will be introducing a new statement message from May this year. Cardholders who have only made the minimum payment in the previous six months will see the following message on their statements:

"We’ve noticed recently you’re only paying the minimum amount; this will increase the time to clear your balance and cost you more in interest. If you wish to discuss your payment, please call Customer Services."