New credit card offers flexible interest rate

Thursday, October 20, 2005

Barclaycard will launch an innovative flexible interest rate credit card next week.

The interest rate is variable depending on how much the customer pays off on the balance of the card each month.

If they pay off ten per cent or more, they get the lowest rate of 9.9 per cent, rising to 16.9 per cent for those who pay off the minimum 2.5 per cent.

The card is the product of the Credit Health Survey by the University of Warwick that showed more people would pay off their balance quicker with the new type of card as opposed to one that offered no benefit for larger payments.

"For some customers – particularly those that revolve a balance - Flexi-Rate would be a much better option than, for example, zero per cent offers where customers automatically pay higher rates following the offer period, said Professor Henry Stott of the University of Warwick.

"That’s because people say they would start changing their behaviour by paying back more each month."

He added: "This change in behaviour will give them a more sustainable, long-term attitude to managing debt."

The new credit card from Barclaycard comes just weeks after the announcement that they were streamlining the credit cards they offered and were also raising interest rates.