Barclaycard to make a BIG change to credit card fees for millions of customers

BARCLAYCARD is making a big change to credit card fees for millions of customers after the Bank of England cut interest rates yesterday.

Yesterday, the Monetary Policy Committee (MPC), the BoE’s rate-setters reduced the base rate from 4.75% to 4.5%.

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Barclaycard has unveiled a series of credit card interest rate reductions this morning[/caption]

The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs including mortgages and credit cards.

In light of this, Barclaycard, a subsidiary of Barclays that caters to over 20million customers, is lowering the interest rates applied to its credit cards across the board, The Sun can reveal.

This means all credit card customers will soon benefit from a 0.25% reduction in their purchase interest rates, as well as the repayment rates applied to cash withdrawals.

For example, if you hold a Barclaycard Platinum and are currently paying 24.9% interest on your purchases, this rate will decrease to 24.65% from your next statement period.

With a 0.25% reduction in the base rate, customers can expect to save approximately 21p per month in interest for every £1,000 of their balance.

The interest rate applied to cash withdrawals will also be reduced by the same margin.

However, it’s important to note that customers who withdraw cash using their Barclaycard will still incur a separate fee of 2.99% (or a minimum charge of £2.99) for each withdrawal.

This separate fee remains unchanged.

Moreover, it’s worth highlighting that changes to the base rate will not affect your interest rates if you are currently benefitting from a promotional balance.

Similarly, the fees and charges applicable to Barclaycard charge card customers in the business sector will remain unchanged.

Unlike credit cards, charge cards require you to settle your balance in full each month and do not accrue interest.

However, customers who fail to make a payment on time will incur a fixed late payment fee.

This announcement follows Barclays’ statement yesterday confirming that for existing customers with a tracker or standard variable rate (SVR) mortgage, their mortgage rate will decrease by 0.25% effective from 1 March 2025.

For new customers, however, tracker and SVR rates will be revised and adjusted sooner, coming into effect from tomorrow (7 February).

A Barclays spokesperson said: “Following the decision by the Bank of England to decrease its base rate, we will be decreasing our rates across tracker mortgage and Barclaycard products.”

What do these changes mean for me?

If you consistently pay your Barclaycard balance in full each month, this change will not affect you.

This is because, provided you do not carry a balance forward, no interest is charged on your payments.

However, customers who only make the minimum repayment each month will incur interest charges.

Since July 2024, customers are required to pay at least the greater of the following amounts each month:

• 1% of the customer’s main credit card balance
• 1% of the customer’s main balance plus any interest, default fees or account fees
• The customer’s total outstanding balance, if this is less than £5.

It’s important to pay at least the minimum repayment amount each month to avoid damaging your credit score or racking up additional charges.

Plus, experts warn that only paying the minimum can lead to paying back far more to the lender than you borrowed due to the interest added.

So, if you can afford to pay extra you will be saving yourself cash long-term.

If you can’t afford to pay more than the minimum balance but want to avoid the added costs of interest, it could be worth shifting your debt to a balance transfer credit card.

The cards are a crucial tool for people who have racked up spending and are trying to repay, as they don’t charge any interest on sums moved for set period of time.

How do balance transfer credit cards work?

Credit card customers can put an end to paying interest for up to 32 months for a small processing fee of between 2-4% by shifting their debt to a balance transfer card.

These cards make your debt easier to pay off because money saved on interest can be entirely put towards what you owe.

However, it’s important to note that you can’t transfer a balance between cards from the same bank.

You should always use an eligibility calculator before applying for a balance transfer card because every credit card application leaves a mark on your credit file and can affect your credit score.

The best cards currently available include one from Barclays which is offering a 32 month long 0% deal with a 3.45% fee.

NatWest is offering up to 31 months at 0% with a fee of 3.49%.

To assess all the available cards, visit price comparison websites like MoneySavingExpert’s Cheap Credit Club or Compare the Market.

Once you run your details through an eligibility calculator and you’ve been shown that you’re likely to be accepted, make a formal application.

To do this, you will need to provide your name, address and email address as well as details of your income so a provider can assess your eligibility.

You will also need to provide details of how much money you want to transfer to the new card, but you can often do this after you have been accepted.