The effective annual interest rate on your card is variable and linked to the Bank of England's Base Rate. If the Base Rate changes we will update our systems within 7 working days and your effective annual interest rate will move by the same amount, usually on the date of your next monthly statement. However, your interest rate will not track any movements in the Base Rate below 1% (for example, if the Base Rate is ever below 1% we will treat it as if it is 1% when we work out your effective annual interest rate).
Credit Profile Assessments
In addition to Base Rate movements, your card’s interest rate may be affected by how you manage credit. Factors considered include:
Missed or failed payments on your account.
Whether you’ve exceeded or approached your credit limit.
Performance on other credit products, such as loans or mortgages, as reported by credit reference agencies.
Your overall credit score and repayment history.
Account-Specific Notices
If your interest rate is due for an increase, you will be notified in advance. You may choose the following options:
Continue using the account under the new terms.
Close your account before the change takes effect. In this case, your account will enter a paydown phase, during which further use of the card is stopped, and you pay off the balance over time. This choice is irreversible. Please note that the decision to initiate the paydown phase is final, and reopening the account or resuming transactions on the associated card will not be allowed. During this paydown phase, your card will be permanently deactivated for new transactions, and the account will be marked as closed on your credit report once the outstanding balance reaches £0.
Additional Considerations
Interest charges are multi-factorial and not solely influenced by Base Rate changes. Internal reviews use multiple data points unique to each customer. Some decisions may seem unrelated to external interest rate reductions; however, these reflect ongoing risk assessments to ensure compliance with responsible lending practices.
Please note that you can opt in for the interest free period by clearing your statement balance on or before your scheduled repayment date, after your statement has been generated each month. If you clear your statement balance before or on your scheduled repayment date, you would not be charged interest on your next statement. However, interest may still accrue on remaining balances during a paydown phase, unless you opt into an interest-free period or meet the criteria for one.
Additionally, managing your credit responsibly—such as avoiding missed payments, exceeding minimum repayment expectations, and staying within your credit limit—can help maintain or improve your credit profile and avoid interest charges.
Understanding the Paydown Process
What is a Paydown State?
A paydown state occurs when your account is closed to new transactions, but you still have an existing balance to repay. During this period, the card is deactivated for future use, and payments may continue until the balance is cleared.
Key Obligations During the Paydown Period
Minimum Monthly Payments: After your statement is generated, ensure you meet the minimum monthly payment obligation.
Account Closure Upon Zero Balance: The account is fully closed and removed from credit agency reports when the balance reaches £0.
Credit Agency Reporting: Until the balance is fully paid, the account remains "open" according to credit reference agencies.
Interest Implications
Interest charges might still be applied during the paydown phase, except when qualifying for an interest-free period. The existing rate remains effective throughout the paydown duration.
Irreversibility of Paydown Status
Once an account enters the paydown phase, it cannot be reactivated for new transactions or other uses.
FAQs About the Paydown Process
Can I still make payments while in paydown mode?
Yes, standard payment methods, such as bank transfers, can be used to clear the balance faster, and additional payments are allowed.
What happens if I fail to meet my payment obligations?
Failure to make timely payments could result in late fees and impact the account's status with credit reference agencies.
What happens when my balance reaches £0?
Your account will be marked closed and no longer reported as "open" by credit agencies after a zero balance is achieved.