Bank of America reinforces commitment to UK credit card customers through minimum payment change
Chester, UK: Bank of America today announces that, beginning from April 2011, minimum monthly payments for all new and existing UK credit card customers* will be set at a minimum of 1% of their principal balance plus an amount equal to any interest, fees and charges.
Ian O’Doherty, Europe Card executive for Bank of America Europe Card Services said: “This change is another example of our ongoing commitment to customers. There is a widespread view, expressed by consumer groups, consumers and commentators that minimum payments are currently set too low. Our research and our experience confirm this; British credit card customers are in favour of what we are doing, and our experiences in the UK and other markets reassures us that this is the right thing to do.”
Bank of America Europe Card Services introduced this minimum payment calculation for all new customers starting in the middle of 2009. All lenders are now operating similar calculations for their new customers, as part of guidelines agreed between the cards industry and government.
An independent survey, commissioned by Bank of America Europe Card Services, indicates that nine out of 10 British credit card users support extending the ‘one per cent’ minimum payment guideline to existing customers.**
Bank of America began notifying customers of the change this week, before it is reflected in customer statements from April 2011, and has provided tools and illustrations to explain what it could mean.
Mr O’Doherty added: “By introducing this approach for our customers, those regularly paying only minimum payments could save significant amounts of money over time and pay their balances off much more quickly. We are taking the lead with this positive step because it is the right thing for all of our customers – and if it is good for our customers it is ultimately good for our business.
“For the vast majority of our customers – who either pay in full or pay more than the minimum payment – this change will have little or no impact. Only a small percentage of our customers make only a minimum payment in any one month, and the number routinely making only minimum payments is even smaller. For those customers who may feel the impact of this change we have customer service specialists to support them, and we are giving them the time and tools to understand what this could mean to their monthly budget.”
Bank of America’s online calculator and other information are available at www.bankofamerica.co.uk/minimumpaymentchange. Any customers who would like to know more can also speak to a customer service specialist on 0800 062 062.
* Excluding customers already behind with their payments
** Bank of America Europe Card Services commissioned independent research agency Opinium Research to carry out a survey of 4,166 nationally representative study of the UK (2,884 credit card customers) from 30th December 2010 to 6th January 2011. Results were weighted to nationally representative criteria. The question asked to survey respondents was:
“UK credit card companies recently agreed to increase the minimum payments that new customers would make. This means new customers have had to pay off at least 1% of their outstanding balance each month, substantially reducing both the time it takes to pay off their balances and the overall amount of interest they pay to their credit card company…”
Q8) Do you think that credit card providers should be encouraged or required to apply this approach to existing customers too?
- Yes, they should be required to (60%)
- Yes, they should be encouraged to (27%)
- Credit card companies should decide themselves to apply this approach (i.e. without pressure from elsewhere) (5%)
- No, I don’t think credit card companies should do this at all (3%)
- Don’t know (5%)