Barclaycard reduces rates by up to 5%

by Gill Montia

Story link: Barclaycard reduces rates by up to 5%

Barclaycard says it will be cutting rates for some of its customers in the months ahead.

The credit card provider will reduce the cost of borrowing by between 2.5% and 5% for over 25% of cardholders, with the first reductions due to be announced before the end of January.

Meanwhile, new customers signing up for Barclaycard Platinum and Barclaycard OnePulse can already benefit from reductions of between 2.5% and 12.4%.

According to the lender, cuts are being made possible by cost savings and cheaper money market rates.

These are being passed on to customers, mindful of the fact that reducing the cost of borrowing could stem a rise in payment defaults.

Last year, the cost of borrowing on credit cards rose, despite cuts in the Bank of England’s base rate.

In November, financial analyst Defaqto reported that the average annual percentage rate stood at an uncomfortable 17.6%.

Ministers began to apply pressure to card providers and from January, Barclaycard and others agreed to give customers struggling with repayments a 60 day period of grace.

Providers have also agreed not to raise rates if customers can show they are working to solve repayments problems with a debt advice group.

Around three million customers should benefit from Barclaycard’s rate cuts, however around nine million cardholders are being left out in the cold because they are not regarded as low risk.