Barclaycard claims its customers 'repay balances quicker'

June 8, 2006

By Peter Kenny

Credit card provider Barclaycard has claimed today that it is encouraging its customers to repay their balances more quickly through its Flexi-Rate scheme.

Barclaycard's Flexi-Rate initiative works by charging a lower interest rate to customers who pay off a higher proportion of their balance, with customers who pay off ten per cent or more being charged 9.9 per cent interest.

The lender has analysed the repayment behaviour of its customers over the past seven months, showing that half as many of its customers are consistently making minimum repayments compared to a standard card.

Changing repayment behaviour can have a positive effect on customers' finances, Barclaycard claims.

The company gives the example that a customer borrowing £1,000 on a credit card with 15.9 per cent APR would take 21 years and three months to repay their balance and pay £1,400 in interest.

According to Barclaycard, the same amount borrowed on a Flexi-Rate card and repaid at ten per cent per month would take four years and six months to pay off and incur a cost of £110 in interest.

"Flexi-Rate is doing exactly what it was designed to do – that is, encouraging people to pay back borrowing sensibly," said James Le Brocq, head of Barclaycard UK credit cards.

"Increasing the amount you pay back each month can dramatically reduce both interest costs and the time it takes to repay."