Over 10 million Barclaycard credit card customers will have their interest rates linked to the Bank of England base rate from February next year, while the same is also happening for some Lloyds Banking Group customers.

The move means that if you don't repay what you owe in full each month, as we always say you should, you'll end up paying more in interest if base rate rises. So those making just the minimum repayment will be affected by this.

On the flip side, in the unlikely scenario base rate falls, you'll pay less in interest.

For example, let's say your credit card provider charges a typical APR of 18.9% and you don't have a promotional period. On an outstanding balance of £1,000, the interest you'd pay ordinarily would be £14.56. But say the Bank of England base rate rises by 0.25%, the interest you'd pay would rise to £14.77 – a 21p increase.

The Bank of England base rate currently stands at 0.5% and shows no immediate sign of increasing or decreasing. Mark Carney, the Bank of England Governor, has hinted in recent months that an interest rate hike could come under consideration in early 2016, but he revised his opinion last month saying rate rises could actually be as far away as 2017.

MoneySavingExpert.com always tells people to pay off their credit card balances IN FULL at the end of every statement period, and to set up direct debits to do so. Do this, and you won't be affected by this change as you won't pay any interest anyway.

Those with a promotional credit card rate, such as a 0% interest deal, also won't pay any interest during the 0% interest period. However, once the offer expires, unless you repay in full every month, you'll be charged interest linked to base rate.

Martin Lewis
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When does this change take force?

Barclaycard will link base rate to interest rates from 1 February 2016 for its 10.5 million customers. If base rate changes, customers will see this interest rate applied from the day after their next monthly statement.

Lloyds Banking Group, which includes Lloyds Bank, Halifax and Bank of Scotland, already links base rate to interest rates for Halifax and Bank of Scotland credit card customers who joined before August 2011, and for Lloyds Bank customers who joined before an undisclosed month in 2011.

Those who took out a credit card with Halifax and Bank of Scotland after August 2011, and who took out a Lloyds credit card after the undisclosed month in 2011, will periodically have had this change applied – this will also apply in future for those who've yet to see the change.

You'll be notified by letter in advance of this happening – a batch of letters was sent out to some Halifax, Lloyds and Bank of Scotland customers earlier this month, with the interest rate being linked to base rate from 3 February 2016.

Lloyds Banking Group customers will see their interest rates change from the last working day of the month in which the Bank of England announcement is made.

Can I get out of the change?

The only way to avoid the change is to close your account. If you do this, you won't be able to use your card again, although you'll be able to pay off your outstanding balance at the interest rate at the time you close your account.

If you have existing credit card debt and want to close your Barclaycard or Lloyds Banking Group account, consider transferring the debt to a balance transfer credit card for a small fee, and then pay off the debt at 0% interest over up to 37 months. See our Balance Transfers guide for the best buys.

Alternatively, if you mainly spend on your credit card, consider getting a purchases credit card. The current top player gives you 27 months' spending at 0% interest. See our Credit Card Purchases guide for the best buys.

Helen Saxon, money desk leader at MoneySavingExpert.com, says:

"In the short term, it's unlikely you need to do anything. The Bank of England has recently said base rate isn't likely to rise for at least a year, meaning your Barclaycard rate's unlikely to change.

"However, if you are paying off credit card debt, you can get around paying the interest on it in the short-term. There are many lenders, for example, offering incredibly cheap 0% balance transfer deals, and some cards will even allow you to shift debt without a fee."

Will other providers follow suit?

Major credit card providers American Express, Capital One, MBNA, Post Office and Virgin Money say they don't currently link interest rates to base rate, and don't have any plans to do so at present.

What do Barclaycard and Lloyds Banking Group say?

Barclaycard says the move is part of efforts to simplify its products and to bring more transparency to customers so it's easier to understand how the cost of borrowing will be impacted.

Lloyds Banking Group meanwhile says: "Since 2011 the majority of our customers' accounts have had their interest rates linked to changes in the Bank of England base rate.

"If the Bank of England changes the base rate, the customers' interest rates will increase or decrease in line with the base rate from the last working day of the month in which the Bank of England announcement is made."

Additional reporting by the Press Association.

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