New scam by credit card companies

A number of consumers in the UK have been surprised to find that when they receive their credit card statements the minimum amount that has been asked for is actually lower than the amount that is going to be charged in interest for that month, which means that even by making the minimum repayment the cardholder would be getting even deeper into debt on the card. According to some experts this is simply the latest method being used by credit card companies to try and get some extra money out of their customers.

One consumer explained that she was shocked to find that despite making the minimum payment that was requested on her Royal Bank of Scotland card her interest would have been higher than the amount that had been asked for. However, a spokesperson for the Royal Bank of Scotland stated: 'Each credit card statement carries a warning to customers that by choosing to make the minimum payment each month, it will take longer and cost more to pay off the card balance. Estimated interest depends entirely on the spending of the individual's account during each statement month.'

A Moneysupermarket spokesman said: 'A lot of providers have been narrowing the gap between the minimum payment and the interest charged, so it is important to check your statement and pay as much as you can.' For those that do continue to make just the minimum repayments on these cards the debt could simply keep rising, as the interest is higher than the repayments, which means that without spending another penny on the card consumers could still find their credit card balance rising rather than being reduced.

A review is now being carried out by regulators to see whether the regulations in relation to this issue need to be amended so that customers are charged a minimum amount that will not be lower than the interest charged.

Tom Smith
11th July 2007