Making Minimum Payments and Living In Never Never Land

Most of us have read the book and even seen the movie Peter Pan but none of us should have ever visited the mythical land of the children’s hero. However, many of us are living there right now, in a comfort zone, only repaying the minimum amount on our credit card.

Currently in the UK the standard rate for minimum payments is around 2% of the credit card balance outstanding. Credit Cards GB, a credit card information and comparison site has stated that on average a credit card balance of £3000, 15.9% apr and paying a minimum amount of 2% will take around 36 years to repay. The total interest that would be repaid over this period of time would be a whopping £5,256.76.

However, if the minimum payment was increased to just 5% this same balance would only take 9 years and the interest repaid would be £993.19.

Credit Cards GB owner Peter Kenny adds, “By increasing the minimum repayment required to 5%, banks and credit companies will be assisting consumers who ignore popular advice by keeping to minimum repayments. Debts will be able to be repaid much earlier than before. We always advise consumers to not restrict themselves to minimum payments and that by paying as little as an extra £10 per month would have a positive effect on their longer term finances.”

It seems at the moment credit card companies are being targeted for excessive charges. Just as Brussels has asked for companies to reduce charges for foreign transactions there are now calls for credit card companies to increase the minimum payments for consumers.

For more information on credit cards visit Peter Kenny's site, Credit Cards GB

Alisdair Milton
13/4/06

 

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