From the 1st Februrary, 10.5 million Barclaycard customers will be at the mercy of the Bank of England as the provider links interest rates to the base rate. Hannah Maundrell, Editor in Chief of money.co.uk comments; “With the base rate unlikely to move for at least another year I suspect the majority of Barclaycard’s customers will ‘sit on their hands’ from the 1st February as the policy change will not cost them a penny for quite some time.
“My concern is that people will forget about this change until the base rate starts to move. At this point, many of those in the red could see their interest charges creep up – although apparently some will pay less. In reality, a 0.25% base rate increase would cost customers with a £1,000 balance an extra 21p in interest each month according to Barclaycard.
“Although, for Barclaycard, this is a move that will likely pay off in time. This is an easy cash cow for credit card providers and I suspect this will become the norm rather than the exception across the industry.
“Customers paying interest on their credit card should take this as a prompt to check whether they could cut costs dramatically by making a balance transfer.”