- One customer said his compound rate will almost double in July
- The bank has also reduced its minimum payments for some customers
Barclaycard Platinum customers have seen their interest rates soar without warning in recent weeks, leaving some facing rates almost double what they previously paid.
An email from Barclays seen by This is Money shows that one customer, Robert*, will see his interest rate rise to 23 per cent compounded in July, from his current rate of 13.1 per cent.
The reader told This is Money that he opened his account with a “lifetime” rate of around 8 percent in 2016, which then increased to its current rate “over the last two years.”
Another said that when he opened his credit card with a 6.9 percent interest rate, Barclaycard promoted it as a permanent “low rate” card. The rate has risen 5 percent from the base rate in recent years, but is now projected to skyrocket, and he said he was furious about the increase.
Rate hike: Barclaycard customers outraged as bank nearly doubles interest charges
The email sent by Barclays informed customers: “We wanted to inform you that the interest rates on your Barclaycard Platinum will increase “from 22 July 2024.”
“We are making these changes following a review of our credit card products.”
Much of customers’ annoyance is because Barclaycard positioned its Platinum card as a low-rate offer when they first signed up.
The rate hike is likely to be linked to the Bank of England’s base rate. Although this figure has not increased since August last year, it increased by 1.75 percent in 2023 and has increased from just 0.1 percent to 5.25 percent since December 2021.
In general, simple interest rates rise in line with the bank rate, meaning they rise by the same number of percentage points. Compound rates, on the other hand, will also increase with the bank rate, by a larger amount, as they take into account the interest charged on the interest.
Barclaycard also increased the previous customer’s simple interest rate by 8.48 percent.
A Barclays spokesperson told This is Money: ‘We regularly review our products and, from July, some Barclaycard customers will see changes to their minimum monthly payments, along with adjustments to the APR.
“Customers will benefit from a reduction in their minimum monthly payment and the vast majority will see no change in APR, while some will receive a decrease.”
However, Robert told This is Money: “I said [to Barclays] I will be paying my balance sooner [22 July] and now I will pay the balance every month, so you won’t make any money off me from now on.
“But what I was worried about was that they would lower the minimum payment while doubling the interest rate, which would surely put people into debt.”
As part of the changes, Barclaycard has reduced its minimum payout to just one per cent for Robert.
In 2023, however, Barclays increased its minimum payment on Barclaycard Platinum to 2.75 percent, stating in a letter to the same reader: “We want to help you reduce the amount of interest you are paying and help you pay off your balance sooner.” .’
Meanwhile, another Barclays client, John*, saw his compound interest rate rise to 21.8, from 11.9 per cent previously.
John also saw his minimum payment maintained as the highest of 2.25 per cent, £5 or any interest, default fees or maintenance fees, plus one per cent of the principal balance.
In both cases, Barclays has raised its compound rates by 9.9 percent.
In 2021, Barclays reduced credit limits for Barclaycard customers by thousands of pounds without explanation. For one customer who spoke to This is Money at the time, this meant he was only able to borrow £2,050, a reduction from his previous limit of £9,000.
*Names have been changed
