You are here: Home - Credit Cards & Loans -

Cardholders urged to up minimum payment

0
Written by:
25/06/2008

Making the minimum repayment only on your credit card every month could equate to paying more than twice for your purchases, recent figures have shown.

Moneyfacts, a price comparison site, has revealed that if a cardholder spends £3,000 on a credit card charging 15.9% APR and repaying the minimum of 2.5% (minimum of £3), they would end up paying an additional £2,729 in interest. It would also take 25 years and two months to repay the debt.

Michelle Slade, analyst at Moneyfacts, said: “The Halifax All in One MasterCard offers 0% on purchases for 10 months. Many shoppers would be tempted by such a deal. However, if they just repay the minimum, they will end up being worse off than if they had used a card without such a deal.”

Making the minimum repayment (2%, minimum of £5) on a £3,000 debt on this card (15.9% after 10 month introductory period), would actually mean repaying £3,522.28, according to Moneyfacts, and would take 31 years and four months.

However, repaying a small percentage on top of the minimum payment could save borrowers thousands. For example, the research showed that the interest charged on the Halifax deal would be £279.41 if the cardholder was to repay £100 per month. The debt would be repaid in two years and nine months.

“Paying just the minimum is very tempting, especially at times like these when many families are struggling, but by doing so you will be storing up additional debt for the future,” Slade added.

Tagged:

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Savings stack up for ex-smokers

Ex-smokers could have reaped the benefits of the smoking ban enforced a year ago by saving more than £2,000, Alliance...

Close