Website: Credit card providers should raise, not lower monthly minimum payments

As a credit card user, are you happy when you see that your minimum monthly payment has gone down? According to website IVA.co.uk, perhaps you shouldn’t be.

After last week’s announcement from Barclaycard, owned by Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642), that it is cutting the minimum monthly payment for its card holders, a spokesperson for IVA.co.uk said that the card’s minimums were going in the wrong direction and that it should have raised them instead. The spokesman, Andy Davie, said that by reducing the minimum payment required each month, Barclaycard was actually raising the chances that users of its credit card could get “into trouble”.

The problem with paying less on a credit card balance each month, Mr. Davie explained, is that it generally means that the cardholder is paying less - or possibly nothing - on the card’s actual balance, making it easier to max the card out. Mr. Davie acknowledged that consumers often “need” credit, but he also expressed the sentiment that credit card users sometimes “need to be protected from themselves”. The way to do that, he said, is to raise rather than lower minimum payments.

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