Tesco Financial institution is rising minimal repayments for as much as 125,000 clients by a mean of £ 20 / month
Minimal repayments can be dangerous: the slower you pay back, the more it costs
The minimum credit card repayments are usually a percentage of your outstanding debt. As your debt goes down, so does the amount you need to pay off. However, this means that if you only make the minimum repayment, your debts will last longer than if you make fixed repayments each month and you pay more interest overall. Use our Minimum Refund Calculator to see how long it will take to refund your card if you only pay the minimum.
Because of this, for many, a higher minimum repayment is a good thing – it means you can get out of debt faster. And if you can afford it and are paying interest on your credit card now, consider paying back some more. The faster you pay back, the less it will cost. If you can afford it, consider making a fixed repayment higher than the minimum repayment to pay off your debt faster.
You can also check whether you can reduce the repayment costs with a balance transfer. For more information, see our guide to minimum credit card repayment.
Tesco Bank customers who removed cards between 2017 and 2020 may be affected
According to Tesco Bank, the switch will affect people who opened credit card accounts between November 2017 and May 2020 (with the exception of the Foundation credit card, which is not changing) – and who are currently in the process of introducing their credit cards.
While the change comes into effect in March, payments will not change until your introductory phase, according to Tesco Bank. For example, if your introductory period does not end before May 2021, your repayments will not change until then.
Tesco Bank has also stressed that it will not apply the increases to customers who are struggling to make larger repayments. However, you were not notified if the changes did not apply to you. So if you haven't heard, your payments won't change (if you're not sure, you can still get in touch).