''Minimum payment'' consumers face 30 years of debt

By MoneyhighStreet Staff. Published on September 4, 2008 This post currently has no comments.

Money
Consumers that only meet the minimum monthly repayments on their credit cards could take more than 30 years to pay off their debt, according to new research.

Four in ten credit cards currently available on the market require a minimum monthly repayment of just two per cent, figures from uSwitch.com reveal.

Only six per cent require a monthly repayment of six per cent or more.

It would take a consumer 31 years to pay off the average credit card balance of £1,384 by only meeting the minimum two per cent each month, paying more than £2,000 worth of interest in the process.

Simeon Linstead, head of personal finance at the price comparison website, explains that this is an "expensive lesson" for consumers to learn.

He said: "The past year we have seen an increase in credit card spending, making minimum repayment levels more of a problem now than ever before.

"Those that opt to manage their credit card debt in this way could end up paying far more than they need to for every purchase made."