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Major payment change for Barclaycard credit card users

Paloma Kubiak
Written By:
Paloma Kubiak

Barclaycard is to go ahead with a major shake-up of its credit card terms and conditions which will see some customers forking out higher minimum payments at a time when many are already struggling financially.

In November, YourMoney.com revealed that Barclaycard was sending emails to customers informing them of changes to their terms and conditions taking effect on Tuesday 26 January.

It confirmed it was making changes to the way it calculates monthly minimum payments, changes to the interest charged on cash transactions and a ban on card use in the gambling sector.

The changes impact Platinum, Initial, Freedom, Forward, Cashback, Littlewoods, Rewards and Hilton Honors customers, but not those with Premier or Woolwich cards.

Essentially, it means from tomorrow, Barclaycard will use the highest of these three calculations (individual to each customer):

  • 2-5% of a customer’s main balance, plus any instalment plan payments
  • 1-3% of a customer’s main balance plus any interest, default fees or account maintenance fees, in addition to any instalment plan payments
  • £5 or a customer’s total outstanding balance if it’s less than £5.

Barclaycard confirmed that for some customers, they will see their monthly minimum payments increase. It said that by paying a little more each month, customers could clear balances sooner and pay less in interest.

As an example, a customer with a £2,500 balance currently pays a minimum £79.42. However, in January, this will rise to £116.92.

However, it added that the majority of customers are already paying more than the minimum amount, so they won’t see any change. It will also exclude customers where, based on their current balance, it would have led to a significantly large increase in their minimum repayments.  

Further, financially vulnerable customers, including those who have already taken a payment holiday, are exempt from these measures.

Cash transactions

For customers who pay their main balance in full (standard, cash and promotional balances that aren’t 0%), plus any instalment plan payments due that month, there will be no interest on sterling cash transactions, such as when you withdraw money using your card in the UK.

Gambling transactions

Barclaycard will block any transactions made at gambling establishments and websites as a result of the Gambling Commission announcement in April 2020 banning credit card customers from these transactions. This means if customers try to use their cards, the transaction won’t go through.

Customers can still use their credit card to buy lottery tickets in retail stores, such as supermarkets.

What Barclaycard customers need to do

Barclaycard confirmed customers do not need to take any action as the changes will be automatically applied from 26 January 2021.

However, if customers feel they may struggle with potentially higher minimum monthly payments, they should contact Barclaycard to discuss payment options.

A spokesperson added that other changes are also coming into effect on 26 January:

  • Changes to the late payment fee. Where customers were previously charged £12 for every month there was a late payment, after this date the fee will only be applied a maximum of four times a year
  • Changes to the overlimit fee. Where customers were previously charged £12 each time they exceeded their credit limit, this fee will be removed
  • Customers will receive up to a 56 day interest free period on cash transactions as well as purchases.