Some of the largest financial services firms in Britain have been cutting their minimum repayment rates in recent months and uSwitch.com is concerned that the changes could lead to consumers taking considerably longer to pay off their credit card debt.
Indeed, the price comparison firm insists that if minimum payment rates are maintained at their current level there will soon be thousands of people paying off their mortgages before their credit card debts.
“Despite the introduction of ‘health warnings’ on credit card statements, the implications of making the minimum repayment each month are still not clear enough to consumers,” said Mike Naylor, personal finance expert at uSwitch.com.
“There is little justification for setting minimum repayments at just two per cent and we believe that it is time that the industry agreed a standard minimum repayment amount of at least three per cent on all credit cards.”
A study by Abbey revealed recently that millions of British consumers are adding to their debt management problems by spending money on what the company called “pointless purchases”.