BALANCING ACT JUST GOT EASIER

Barclaycard is shaking up the credit card industry with a move that could cut interest costs for millions of people.

From August 1 the firm is waiving all interest charges on purchases for cardholders with a promotional balance, such as a purchase promotion, balance transfer or money transfer.

This means that people making purchases, which they pay off in full when their bill arrives that month, will no longer pay any interest on them – even if they still have a promotional balance outstanding on their card.

Currently, the typical industry practice is that any spending on a card with a promotional balance triggers an interest charge unless the full balance is repaid.

The change comes as research from Barclaycard shows almost two in five people have more than one credit card with more than half of those holding different cards for different uses – such as one for a balance transfer and another for spending. And two in five of those with multiple cards would prefer to have a single card and manage just one account.

Jennie Knight, managing director at Barclaycard, said: “Simplifying the way interest is charged is a positive move for our cardholders and could benefit millions of customers in the UK.

“Aside from reducing any confusion when their statement arrives, consumers will now be able to hold just one card that can do it all, from transferring balances to making everyday purchases.” This is how the system works: A customer has transferred a balance of £1,000 at a 0% promotional rate for 18 months.

If they make purchases totalling £500 by the 10th day of their billing cycle, interest is calculated daily on these transactions. Assuming a typical 19.9% APR on purchases, that would usually equal £15.13 interest on their next statement if the balance isn’t fully cleared.

After the change, if the customer pays £500 to clear the new purchases, Barclaycard will waive the interest payable on the purchases.

YOUR MONEY TIP: Ensure you make monthly repayments that cover purchases and pay off some of the promotional balance so you can get the total outstanding balance repaid within the 0% promotional period.