Barclaycard has launched an innovative flexible interest rate credit card following research which says customers want greater choice over repayments.

The new card, launched last week, offers an interest rate which is variable depending on how much the customer pays off on the balance of the card each month.

If customers pay off ten per cent or more they get the lowest rate of 9.9 per cent - rising to 16.9 per cent for those who pay off the minimum 2.5 per cent.

The new card was developed following research by the Credit Health Survey at the University of Warwick.

The research showed more people would pay off their balance quicker with a type of card which offered flexible payments as opposed to one that offered no benefit for larger payments.

Professor Henry Stott of the University of Warwick said:

"For some customers – particularly those that revolve a balance - Flexi-Rate would be a much better option than, for example, zero per cent offers where customers automatically pay higher rates following the offer period.

"That’s because people say they would start changing their behaviour by paying back more each month. This change in behaviour will give them a more sustainable, long-term attitude to managing debt."

The new Barclaycard credit card comes shortly after the announcement Barclaycard were streamlining credit cards services and were also raising interest rates.

A spokesperson for debt counselling charity The Consumer Credit Counselling Service welcomed the move to encourage cardholders to manage their debts more effectively:

“The problems of people we help arise substantially from penalties and charges and the card industry has been careering towards a socially dangerous situation in which a smaller number of people, badly organised or financially damaged, are paying the bill for the rest of the community…

“In this context Barclaycard's new initiative...represents a more intelligent approach by lenders which offers consumers a helpful choice."

Barclaycard UK Cards and Loans Managing Director Keith Coulter added:

“Interest rates are only ever half the story – the speed at which you repay will always have a huge bearing on the cost of credit. Flexi-Rate puts the consumer back in control and planning for the long-term rather than putting off a decision to tackle their debt.

"This new concept recognises that both the lender and the customer have an equal commitment to managing debt responsibly.”

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