ING Direct to increase minimum credit card repayments
The lender hopes that higher minimum repayments will help cardholders pay off their balances faster and avoid debt traps.
In March, we reported that ING Direct announced plans to launch its first credit card this year. While the card is still not available on the market yet, the bank has confirmed that it will come with a high minimum repayment threshold to help cardholders control their debt.
Currently, most credit card issuers require cardholders to pay at least 2% or 3% of their total balance to avoid late payment fees. Naturally, this means that many cardholders merely pay the minimum and the remaining 90-something percent of their debt stays in their account and grows with interest. Meanwhile, ING has confirmed that its credit card will come with a minimum repayment of 10% each month. This is around five times more than the standard interest rates you’ll find on the market.
According to News Corp Australia, ING Direct’s executive director of customers John Arnott has said the move ensures more responsible lending and will help Australians avoid falling into a debt trap.
So, if you had a credit card debt of $3,136 (which is the average card balance for Australians), you’d have to pay $313.6 to meet the minimum repayment and avoid late payment fees. While it’s necessary to meet the minimum repayment, it’s best to either clear your balance in full or pay as much as you can to keep your interest costs to a minimum. Otherwise, even if you meet the minimum repayment of 10%, that still leaves 90% of your balance to grow with interest.
For more information about the ING Direct credit card as it becomes available, check back with finder.com.au.
- New year, new business: Employee retention tips for January
- How your mortgage can get you big credit card savings
- January’s best balance transfer credit card offers: Start the new year with 0% p.a. for up to 30 months
- 5 key questions to ask when you’re selecting a card for business spending
- 6 things small businesses can do to set themselves up financially in 2021