| Neverending debt story as repayment made difficult by Goldfish |
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Goldfish card undergoes a paradigm shift as it declares a host of new developments. To start with, cardholders will no longer enjoy the benefits of free travel accident insurance. The minimum monthly repayment amount for 1.3m card customers will be reduced to 2% of the money outstanding as against the present figure of 3%. This will be effective from 1 July.
As indicated by Lloyds TSB, in real terms Goldfish lures borrowers by charging only 14.9% interests but on the contrary deprives clients of loyalty points, a feature found in latest and expensive versions charging 17.9%.
To site an example, a person owing £2,000, paying 3% monthly minimum repays debt in the span of 14 years and nine months with an added interest of £1,221. The change however, translates the debt repayment period to almost 27 years with interest of £2,574. The current regime results in great increase of the interest amount and the repayment period, strongly abhorred by consumer watchdog organisations and consumers themselves.
Frances Walker of Free Debt Advice Service, opines that it has been their constant endeavor to recommend that people pay more than the minimum to avoid added interest mounting up and above all to clear the debt as quickly as possible, thereby avoiding high interest charges.
The situations for those who have signed for the payment protection insurance will further deteriorate their conditions as it is supposed to cover their monthly repayments, just in case they are unable to work.
Lloyds TSB are keeping silent about disclosing the number of customers paying the minimum payments every month. It also declinened to offer information on the number of customers opting for the payment protection insurance.
A spokesperson reveals that the bank publishes a warning on the credit card statements, which denotes that “it will cost more, and also the time taken to clear the balance will increase if minimum payment option is repeatedly made.”
However, there is no alarming message or warning for the people who take the payment protection insurance to outline that they would simply never repay their debt if they paid only the minimum payment each month.
It is not only Lloyds TSB who has pioneered the minimum payment to 2%. Joining hands with them is the Co-op Bank, Barclays, Egg and most Halifax/Bank of Scotland cards.
Goldfish borrowers will also be charged 2% for withdrawing cash (applicable from 1 July) vis-a vis the current interest rate of 1.5%.
It is expected that WH Smith Subscriptions, Laithwaites Wines, Asda and Goldfish Travel Service will no longer use the Goldfish points scheme now that these new terms are in place.
Posted
on : Tue, 10 May 2005 13:30 GMT | Credit Cards News
By : Paula Jenkins
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