According to figures released today by Barclaycard, the lender's new Flexi-Rate credit card product is reducing the time taken for customers to pay back their credit card bills.
As a result, those using the new Flexi-Rate card are dramatically reducing the interest they pay in maintaining a debt on their plastic.
The scheme was introduced in October 2005. The card has a variable rate of interest so that those paying off over ten per cent of their balance are charged a lower interest rate (9.9 per cent) than those paying off five per cent (12.9 per cent), or less than five per cent (16.9 per cent).
Barclaycard's James Le Brocq claims that the new system has encouraged ten per cent more customers to pay off more than the card's minimum amount.
"Flexi-Rate is doing exactly what it was designed to do – that is, encouraging people to pay back borrowing sensibly," he said. "Increasing the amount you pay back each month can dramatically reduce both interest costs and the time it takes to repay."
As an additional measure to encourage sensible borrowing, Barclaycard will print a warning message at the foot of card statements when customers are paying only the minimum amount each month over a period of six months or more.To read more about credit cards, click here.
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