Barclaycard to hike minimum payments in major credit card shake-up

Update 25 January 2021: This story was first written in November but the information has today been updated. The changes explained kick in on Tuesday 26 January 2021.   

Barclaycard's new terms and conditions kick in from 26 January 2021, with a raft of changes to what you pay when using your credit card. They apply to its Forward, Platinum, Cashback, Freedom (formerly Initial and Littlewoods), Hilton Honors and Barclaycard Rewards cards – though not the Premier, Barclays Infinite and Woolwich cards. 

Crucially, it's changing the way it calculates customers' minimum payments, ie, the lowest amount you can repay on your card each month. Barclaycard won't say how many customers will see their minimum payments increase, or what the typical hike will be, but we've seen some customers warned their payments could rise by up to 50%. It says no one will see minimum payments drop due to the changes. 

We've full info below on exactly what's changing, and what you can do about it. See our Credit Cards guides for more help and our current top picks for 0% spending, balance transfers, rewards and rebuilding your credit score.

How is the way minimum payments are calculated changing?

Currently, Barclaycard customers have standard repayment levels, based on when they opened their account:

• If you opened your account since December 2010, the minimum you must pay each month is the highest of 2.25% of your balance, 1% of your balance plus interest, or £5.

• If you opened your account before December 2010, it's the the highest of 2.25% of your balance, 0.1% of your balance plus interest, or £5.

With cards where the terms are changing, your minimum repayment level will be personalised to you from your next payment on or after 26 January. Barclaycard hasn't explained exactly how this is done, but says it'll mean each customer pays down their balance and avoids persistent debt. It's contacted customers to tell them what they must pay.

We've asked Barclaycard how customers can check if they're impacted if they haven't yet heard or they've mislaid the info and we'll update this story when we know more. While exact repayment levels will vary, we do know the range of minimum payments though. From 26 January for most customers, it will be the highest of:

• 2% to 5% of your balance (exact percentage depends on the customer). This is based on your main balance, and doesn't include any instalment plan payments which you must also make each month. 

• OR 1% to 3% of your balance plus interest (exact percentage depends on the customer). Again, this is of your main balance, and doesn't include any instalment plan payments, default fees or account maintenance fees you must also make each month. 

• OR £5, or the total outstanding balance if this is less than £5. This is already the case now and isn't changing.

However, you WON'T be affected by the minimum payment changes if you've taken out a payment holiday – even if this payment holiday has now ended and you've started making repayments again. And Barclaycard also says it won't apply the changes if it would result in a "significantly large increase" to your minimum repayments – though it wasn't able to tell us how big an increase would count as "significantly large".

How much more will I pay each month?

Barclaycard hasn't said how many customers will see their repayments change, or by how much, though it has said no one will see their minimum repayments drop and most affected customers pay more than their minimum repayments anyway.

We've seen 10 emails from Barclaycard explaining the changes to users. The examples given in those emails assume a balance of £2,500 and show monthly repayments would rise by between 30% and 52% – in one case, the example monthly repayment rises by £37.50, from £72.58 to £110.08. However, we've no idea how representative these figures are of the changes as a whole. If you've been told your minimum repayments are changing, let us know at news@moneysavingexpert.com.

Here are a few of the comments we've seen from Barclaycard customers on social media:

My minimum payments are going up – what can I do?

If you pay the minimum amount automatically by direct debit, Barclaycard says it will adjust this for you. But if you pay a set amount by standing order or fixed direct debit, you may need to adjust it to ensure it covers your new minimum payment.

Of course, making higher minimum repayments means you'll clear your debt quicker, and will ultimately pay less interest – so if you can afford it, increasing your monthly repayments can be a good idea. But if you'll struggle to afford your new minimum repayments, here's what you can try:

• Complain to Barclaycard. You can contact it via online banking, the app or by calling 0800 151 0900. Explain that you can't afford higher minimum income repayments, and see what it'll do to help. It's worth noting as above that it's said your minimum payment won't go up if it would mean a "significantly large" increase to repayments – and it hasn't quantified that.

• Check if you can cut repayment costs with a balance transfer. This could help if you pay interest on your credit card currently. A balance transfer's where you get a new card to pay off your existing debt, and then owe the new card instead, often at 0% interest – meaning all your repayments will reduce your debt rather than paying off interest. For full info and our current top pick cards, see Balance Transfer Credit Cards.

Technically, you were able to reject the T&C changes and close your account but the deadline to do this was 11 January 2021. If you did this in time, you'll no longer be able to use your card and must continue making repayments under your current terms until your balance is cleared – the changes to your minimum payments and interest rates won't be applied. You'll continue getting statements from Barclaycard until your balance is paid off.

What else is changing?

The changes to Barclaycard's minimum payments are part of a wider shake-up of its T&Cs on most of its cards, which will also come into force from 26 January 2021. Under the new terms:

• You won't be charged interest on UK cash withdrawals, as long as you pay off your balance in full. At the moment, you pay interest on sterling cash transactions – for example, if you use your credit card to withdraw cash from an ATM in the UK – as soon as they're added to your account, even if you pay off the balance in full by the payment due date.

  But from 26 January, you'll only be charged interest for cash withdrawals on any outstanding balance from your last statement, and this interest will be charged at the same rate as your usual spending on your credit card.

• If you go over your credit limit, you won't be charged a fee or lose any promotional interest rate. At the moment, you're charged £12 every time you bust your credit limit.

• You'll only be charged late payment fees a maximum of four times a year, and won't lose any promotional interest rate. You'll still be charged a £12 fee if you miss a payment, pay it late or pay less than your minimum amount – but you'll only be charged it up to four times a year, meaning you won't pay more than £48 in late payment fees annually.

• You won't be able to use your Barclaycard for any kind of gambling transaction. If you try and use your card at a gambling establishment or on a gambling website, it won't go through.