Lower minimum payments ‘can mean more debt’

Millions of those with credit card debt could take longer to pay it back, a new survey has claimed.

uSwitch has found that the average balance of £1,384 could take 31 years to be repaid due to a drop in minimum payments required.

The company reported that approximately 40 per cent of credit cards ask for a minimum monthly contribution of two per cent, or five pounds.

This has meant that borrowers are actually repaying very little towards the final balance, the firm said.

Head of personal finance Simeon Linstead commented: “With the cost of living on the up, people … will be more tempted to just make the minimum repayment on their credit cards and spend the cash on more pressing bills”

He added that this form of debt management could mean borrowers end up paying more for loans and mortgages.

Meanwhile, Abbey has slashed rates on its mortgage products by up to 35 per cent.

By Jamie Price