Could raising the minimum repayments for credit cards help control debt?

June 20, 2007

With news of Barclaycard reducing its minimum monthly fees in order to help consumers, it has caused a bit of a stir with debt experts. Now you would think that lowering monthly repayments would be a blessing for consumers, but some debt experts are claiming that it could make the debt problem worse within Britain and the answer is to actually higher the monthly repayments rather than lowering them.

The reason some experts are against the move from Barclaycard is because they think that when the repayments are lowered, not much of the balance is actually paid off. Most people these days prefer to pay only the minimum balance per month and that is fine, but it means that their balance is never actually paid off properly as interest charges are added. So with an even lower monthly repayment rate it is thought that people will get themselves into even more debt.

You could say that whilst Barclaycard seems to be helping out its consumers, perhaps it is only out for the profit it could make. This is because if people have to pay less each month they might feel like they can spend more on their cards and therefore the balance will just continue to go up. This is fantastic news for the bank as they will receive more profits and they will not have as many people claiming bankruptcy because the repayments will be lower.

So overall whilst at first these new lower monthly repayments might seem like a blessing, they could actually make your debt problems much worse. So think twice before you take up any offers like these and always try and pay off more than the minimum every single month. That is the only real way to get yourself out of debt problems and to start living a debt free life once again.