Carers Allowance and Minimum Payments on Credit Cards

BBC Sounds. Music, radio, podcasts. Hello, welcome to this Moneybox podcast. Barclay Cards slashes the minimum amount customers can pay off their credit card debt to the lowest allowed, 1% a month. That will more than double the time to repay it and the interest the bank collects.

Major ISA providers admit they're still not ready to let customers take full advantage of the simpler rules that began three weeks ago. But first, a Moneybox story has been all over the news this morning. Our headlines today.

calls for the government to take action to stop carers unwittingly racking up thousands of pounds of debt. The Labour MP Sir Stephen Timms, who chairs the Work and Pensions Committee, says the government must take urgent action. Tens of thousands of carers owe money because of benefits. benefit over payments.

Well, we'll hear from Stephen Timms shortly, but first our reporter Dan Whitworth went to meet Carina. She cares for her 22-year-old daughter Amber at their home just outside Carnarvon in North Wales. Carina is being forced by the Department for Work and Pension. to repay more than £11,000 of her carer's allowance. The dining room was turned into a bedroom for Amber, which is... Oh, how lovely. So this is her little room, so that she has ground floor.

living so this is very I mean it's very yellow That's her favourite colour. I can tell. Just the sweetest nature. She's very polite. She's usually cheerful. And she's got a wicked sense of humour. And she's very, very smart. And lots of lovely cuddly toys, a yellow hat, yellow rugs, yellow duvet, yellow pillow. The Easter bonnet. They had to make Easter bonnets and Amber won first prize.

So she came home. Proud mum alert. I can hear that. Proud mum alert. She came home. Amber has a rare genetic disorder called Bardet-Beedle syndrome and that gives her cognitive disabilities so her mobility isn't great. She's registered blind. because her eyesight is extremely poor. And she has probably a mental age of about an eight-year-old, even though she's 22. So...

Day-to-day life for Amber is very difficult. Because Karina is Amber's full-time carer, she used to claim carer's allowance, now worth around £82 per week. But with that allowance comes an earnings limit. Go even just a few pence above that limit, £151, take home pay a week, and you lose the entire allowance.

Now, the only time Karina got to herself all week was working a couple of part-time weekend shifts at the local supermarket when Amber's with her dad, which helped put a few extra pounds in her pocket. And also as a social. thing because I'm a carer 24-7. It was a way that I could go out, hold my head up. Because she was occasionally asked to work an extra hour or two of overtime, Karina unwittingly went above the earnings limit.

Some weeks I was £5 over, some weeks I was 50p over. But wasn't told about it by the Department for Work and Pensions for years. So it came as a massive shock when one day, out of the blue, Carina got a phone call. The lady phoned me up and she said, from the time that you started working, you were overpaid. And three and a half years later, they told me that I had to repay £11,220.

which I do. I still only work 15 hours a week, but I have to pay them back £60 a month. And I've paid them back £2,880 to date, and I will be paying it back till I'm about 73. What do you make of that? To be treated like I'm taking money that I don't deserve, it's heartbreaking. What do you want to see happen here? What do you think needs to happen to help people like you who are... doing an incredible job looking after people like Amber.

The system is extremely complicated. You get masses of forms and there can be 27 pages to these forms and they're all done in legal jargon that normal people... don't understand. They have a system where they can match up national insurance numbers and they know that I've worked 50p over this week. But they allow these bills to accumulate and accumulate and accumulate and then they hit you and they don't care.

I can't go out and work any more hours. So I relied on that carer's allowance to give me a little bit extra money to give me that little bit of... and now it's taken away and now I'm too scared to reapply because I could reapply but I would always live in fear. Carina Moon talking to Dan and Dan's in the studio now. Dan, a lot's been happening this week.

Yes, on Monday there was a debate in Westminster Hall in Parliament when MPs highlighted a petition calling for carers' allowance that's currently £81.90 per week to be increased by hundreds of pounds. Now that's unlikely to happen, but even the fact...

it was being debated in Parliament was a step forward for campaigners. On Tuesday, an advisor to the government on dementia quit in protest at the Department for Work and Pensions behaviour towards carers like Karina. Now, hers is one dreadful case, but what are the latest... Well, they show that in the last financial year, more than 34,500 carers were being chased because of overpayments. Now, the DWP says overpayments account for 2.1%.

of the annual £3.3 billion budget for the allowance. Now, doing some maths, that shows the average debt is just over £2,000. But, of course, some people owe much less. Some people, like Carina, owe much more. Department for Work and Pensions had to say to you about this? Well, it told me carers across the UK are unsung heroes who make a huge difference to someone else's life, adding claimants have a responsibility to inform DWP of any changes in their circumstances that could impact their award.

that's to ensure fairness in the welfare system. Thanks, Dan. Well, listening to all that is the Labour MP, Sir Stephen Timms, the chair of the Commons Work and Pensions Select Committee. Stephen Timms, we just heard last year 34,500 unpaid carers being chased to pay back an average of 2,000... Some of them a lot more. What do you make of how the department's going about recovering this money from what it calls these unsung heroes?

Well, I think the department needs to stop these overpayments happening. The department told my committee five years ago it gets notification from HMRC every time somebody claiming Paris allowance goes over the earnings limit. But they ignore most of those notifications. So people keep receiving benefit they're not entitled to, even though the department's been alerted. And we end up with these huge overpayments, which should never have been allowed.

Yes, so that would help in the future if they acted more quickly. But it does leave the issue of what to do about people like Karina and some... former Department of Work and Pensions ministers, some of whom actually ran the department, have called on the government to pause this clawback. Do you agree with them? Well, I think once an overpayment has been incurred, the department does have a legal obligation to reclaim.

The money. So, you know, I don't think there's any way out of that. But what the department must do is stop this problem. Keep on. getting worse. So in 2022-23, for example, they say there were 36 overpayments they were chasing for more than £20,000. So those would have taken years to build up.

But the department was notified of that overpayment every single month. So why do they let it drag on for so long? And that does raise the question, doesn't it? I mean, yes, people have an obligation to tell the DWP important information, but... It hasn't acted on the information it has. You could make the case that it's made the mistake causing these huge debts and should write off the money. Well, in law... the money does have to be repaid. So I don't think there's an escape route there.

But a very interesting point I thought Karina made is that she's too scared now to acclaim benefit. And I can well understand why. I mean, the government policy is to encourage carers into work. But this system and this danger of overpayments makes it very risky to be working while you're claiming carer's allowance. And of course, the issue is that once you've breached the earnings limit, you don't just lose the allowance for that week. Your entitlement ends. So you have to claim.

it again. And if you're entitled, if your earnings fall below the limit, you have to reapply. And Karina, as you said, is scared. Do you think that should be changed so that you could get it week by week? If your earnings fluctuate, fair enough, lose it one week, get it back the next. Well, I think that would help. That would be quite a difficult change to make, and it would take a bit of time. But a very good first step would be to uprate the carer's allowance earnings limit in line with...

the national living wage. So somebody claiming carers allowance in a fixed hours minimum wage job wouldn't be pushed over the limit just because the government has increased the national living wage. Yes, and of course, Karina earns too much on just 15 hours a week, doesn't she? complaint is there's a cliff edge. You take home £151, that's fine. Take over £151 and a penny and you lose the lot. Should there be a gentler means test if there's to be a means test?

Well, you make a good case, I think, for a taper to be applied to carers' allowance rather than the cliff edge. But that would be a major undertaking. And it's not something that the department could introduce very quickly. So that's why I want them really to focus on stopping these overpayments occurring, which they can do.

while taking a bit longer to think about what form this benefit should take in the future. And very briefly, Stephen, will your select committee be calling for changes in the way the threshold is fixed and managed, in a word? We've taken evidence this week.

It's the second of our evidence sessions on carers allowance and the committee will be considering what next steps we should take in the light of the evidence we've received. We look forward to that. Thanks very much to Stephen Timms, Chair of the Work and Pensions Select Committee.

Now this week's Moneybox Live is about carers and caring. Are you a carer or being cared for? How is it for you? Email us moneyboxbbc at bbc.co.uk and Felicity Hanna counts the cost of caring. That's Moneybox Live Wednesday at three.

The UK's biggest credit card provider, BarclayCard, has announced it will slash the amount its customers pay from their debt each month. Currently, they must pay 2.5% or more than 3% of what they owe. But from July, that's being cut to just...

1% of their debt, the lowest amount allowed by the regulator, way below the average fixed by competitors. Now on the face of it, that may sound like good news, but the change means that if you pay off a debt on your card at that minimum rate, it will take more than twice as... long to clear, and the interest you pay to the bank will more than double. Rachel Springle is from the data service Money Facts.

If you have a card with HSBC or Lloyds, you'll probably notice you've got a minimum repayment of two and a half percent. However, if you've got a card with NatWest or Santander, your minimum is around one percent. So Barclay card is kind of. joining those lenders at the moment in terms of what minimum repayments they have. And in fact, Bartley Card were one of the highest minimum repayments on the market at 3.75% for most of their credit cards. So it's interesting to see them moving this.

Yeah, so they really have slashed it. And you gave some examples there, but what's the sort of average that people have to pay? So on average, you're probably looking around two and a half percent or even three percent on the market. But as I say, there are quite a few credit card companies out there who are giving you a one percent minimum repayment.

Barkley Card increased minimum payments in 2021, so debts would be paid off more quickly. Other card providers did that too. It's now doing a U-turn, slashing it to the minimum. Do you think this is a shift across the industry? towards going back to those lower minimum payments.

Quite possibly. Now, I do know that with Barclay Cards change, they did say that they're doing so to try and support their customers for those who perhaps need that little bit more breathing space to move down their repayments. But I think what I would stress on this fact that that should only really.

be done temporarily. You shouldn't really ever be doing just the bare minimum on your credit card. Sarah, Rachel Springle talking to me earlier. Well, listening to that is Sarah Williams, debt advisor and founder of the website Debt Camel.

Sarah Williams, Markley Carr says this reduction to 1% of your debt is for the benefit of customers, is it? Well, as Rachel said, flexibility can be useful for the odd month, but... Many people can't afford to repay in full, and the only easy option they can see to select is to say they'll pay the minimum every month by direct debit, and that turns into a trap. keeping them in debt for

14, 15 years at the moment, going up to 30 years now with these lower minimums. And it's the danger that because they've said, I'll pay the minimum, when that minimum changes and they'll have had a letter saying, oh, your minimum payment will be reduced, and they might think... jolly good, they won't realise the true effect of that move and they will do nothing about it. I think that's right. The letter does say that if you pay more than the minimum, you'll clear your debt more quickly.

But I think people with a letter which says we're putting the minimums down from 2.5% to 1%, that doesn't sound very much. They're not going to expect that it will take twice as long to clear their debts. and cost them twice as much in interest. Yes. Now, this will apply, obviously, only to Barclays. Well, it'll apply to all Barclays Cards credit card customers, but it'll only really affect those who regularly pay the minimum. Now, we got some figures prepared for us by the data firm Experian.

reference agency, as you know. They showed that of all cardholders, not BarclayCard, all cardholders, 13.2% who've used their card in the last three months only made the minimum payment. Now, that could mean well over a million BarclayCard customers. affected by this. Does that worry you? Yes, it does. Barclay Card is thought to be the largest credit card in the UK. And so I would expect that it could well be a million people affected by these changes.

And they haven't really been noticed. But I've asked people, they've gone back and they said, oh, yeah, I have got that email. but not very many people have actually focused on it. They haven't realised the implications. The regulator, the FCA, sets this minimum at 1%. You can't go lower than that. Should the FCA step in and make it higher than that to help people get rid of their debt more quickly?

I think it should. The FCA brought in rules, what are called persistent credit card debt rules in 2019, 2020. They came into force. increased its rates in 2021 meant that all of its customers then were never going to get into what the FCA calls persistent credit card debt because their minimums would keep them out of it.

Now with this drop, any BarclayCard customers that only pay the minimum payments, after 18 months, they're going to get a warning letter from BarclayCard saying you're in persistent credit card debt. This can't be what the regulator wants. Sarah Williams of Debt Camel, thanks. And if you're in that position, paying a fixed amount makes your debt go more quickly than just paying that 1%.

Now, last week we reported on new regulations that should mean more victims of fraud are refunded by banks and other financial companies known as electronic money institutions, or EMIs. And Dan's back for a quick update. Yes, we said customers of the EMI Tide aren't protected by the Financial Services Compensation Scheme, which guarantees eligible deposits up to £85,000 because it doesn't hold a banking licence and is not a bank. However, the majority...

The majority of Tide accounts are in fact held by its partner Clearbank which is a bank and therefore those customers eligible deposits are covered by the FSCS. OK, thanks, Dan. Well, as you may have heard, there was sad news this week that the former MP and peer, Frank Field, has died aged 81. In the 1970s, as director of the Child Poverty Action Group, Frank put the issue of child poverty firmly on the political agenda.

He helped the Labour government introduce child benefit in 1975, paid to every mother and then without a means test. So it's a cruel irony that just last month, the latest official statistics showed 30% of UK children. a record 4.3 million were in relative poverty in 2022-23, 100,000 more.

than the year before. In his 40 years as the Member of Parliament for Birkenhead, Frank Field tirelessly campaigned for the poor and disadvantaged. Here he is in 1980, talking to Newsnight on BBC Two about the cuts the government was making then. to Social Security benefits.

All the welfare changes, and we've only discussed a few of them tonight, we've not talked about the cuts in unemployment benefit, real cuts in sickness benefit, the abolition of the earnings-related supplements, coming on to the real pension cuts which we will face this year, are all part... of a package to help pay and help balance the books for those tax cuts to the rich. Frank Field, Lord Field of Birkenhead who died this week.

Three weeks after the government relaxed some of the rules about opening ISA's individual savings accounts and moving money between them, Moneybox has discovered that many banks and building societies are yet to offer these improvements to their customers.

As we explained last week, it should now be possible to open and pay into more than one ISA of the same type in the same tax year. But our research has found many of the big providers aren't allowing customers to do this, like Moneybox listener Chris Bowman from...

north yorkshire well i've got two ices two cash ices with the yorkshire building society one is fixed interest over a fixed period and the other one is more flexible so the key thing that I was looking forward to was splitting my deposits into both and was very surprised when i got a letter from the yorkshire building society to say that they transferred some money back

and that HMRC were forbidding deposits into two cash ISAs in the same tax year. Which puzzled me a lot because I understood the rules had changed. i think to send out a letter blaming hmrc when it's their decision is a bit unfair. Well, the Yorkshire Building Society has apologised that the letter sent to Chris wrongly stated the HMRC would not permit multiple ISA accounts, which of course it now will, instead of explaining it was the Society's policy.

Well, after last week's programme, we contacted the 10 biggest banks and building societies that offer cash ISAs. We found that eight are not currently allowing customers to have more than one cash ISA with them. However, seven would allow you to open a cash ISA. if you already have one with another provider.

Another big change is the ability to make partial transfers between ISAs. Previously, if you wanted to move money from one ISA to another, you had to move all of it. Now the rules let you move just some of it. But currently, none. None. of the ten biggest banks and building societies we contacted us are offering this new freedom. Well, with us is Dr Ed Jones, a Senior Lecturer in Banking and Economics at Bangor University's Business School.

Dr Jones, are you surprised at the outcome of our research? I'm not surprised, to be honest. It is an unfortunate situation, especially given the budgets that the banks have in the technology department. This seems to be something quite simple for them to implement.

But also on the legal side as well, there doesn't seem to be much effort needed there. So it is disappointing that the financial institutions haven't taken this initiative to offer more flexibility to their customers. So if it's not the technology, what is it? I believe it's a strategic decision that the financial institutions aren't too sure how to price these products, particularly under cash. They want to, of course, protect their bottom line, their profits.

And therefore, they're conscious of what customers could they potentially lose while also trying to think of ways to attract new customers. Yes, I put the interest rates up, I suppose, in one way, isn't it? But if one or two of them have started, and some of them have, others will want to join in because this could be a competition issue in itself, couldn't it?

Yes, most certainly when we start to see more financial institutions moving in this direction, the likelihood is that we'll see a stampede of new products coming to the markets and all financial institutions will offer. similar kind of services because they won't want to be left out. But until we start to see that avalanche, it's going to be a slow process. And while, of course, while customers wait for this, they're losing interest. Should the banks hurry it up?

Of course, banks should hurry this up. There isn't a technology and a legal reason why it should be this slow. And of course, customers are missing out at the moment because they're not able to get the best returns. Do you think there will come a point when it should be made a legal requirement to implement them? Because at the moment they're choosing not to. But of course, I suppose the FCA or even the Treasury could step in and say, well, sorry, folks, you've got to do this.

I think it would be a good step forward because, again, it is the consumer that is going to be winning. The banks, all they're concerned about is their profitability at the end of the day. And therefore, by all means, make this compulsory and let the consumers get the best returns. Dr Ed Jones of Bangor University's Business School, thanks. Well, HMRC told Moneybox it has worked closely with the industry to implement the changes. Some providers have already made them and it expects others.

Well, your emails, I have to say, have been pouring in. uncountably pouring in, many of them, about the carer's issue. Jasmine said she looks after her 83-year-old mother who needs more than 35 hours of care per week. Jasmine is self-employed. She works around her mother's care needs she last received carers allowance in february but nothing since then i can find it appalling they can just stop it without any communication or warning it just feels that we are totally unappreciated and peter said

he got carers' announce in Wales and a £500 bonus paid by the Welsh Government was taken back from him. Many, many more along those lines. Well, we talked about flexibility of ISAs earlier. There's not much flexibility about when the Moneybox podcast ends, and that time has almost come. I'll squeeze in a reminder that you can hear the programme first when we broadcast live BBC Radio 4 Saturday. days at noon.

Prescription charges rise in England by 25 pence to £9.90 an item on May 1st. So if you're listening to this podcast in time and have medicines to collect, dash off and do it before then. In Scotland, Wales and Northern Ireland, of course, prescription... We do read them all. Next time.

It could be you. And dashing off to read those emails, our reporter Dan Whitworth, researchers Sandra Hardiel and Joe Krasner, studio producer Craig Henderson. Our studio manager was George Willis. Our editor was Beatrice Pickup. I'm Paul Lewis, and this was a BBC News money and work production for BBC Sounds. And now, Helen Lewis has left the chat, but where is she? I'm Helen Lewis.

And I have a question. What links family WhatsApp dramas? I flounced off after someone made a particularly ignorant comment. Russian state propaganda. It's a very good platform for spreading all this pro-Putin position. And a woman who married an AI. 100% I would never go back to humans ever, ever again. No idea?

Well, they're all examples of how instant messaging has changed the world. Find out more by joining me for my new BBC Radio 4 series, Helen Lewis Has Left the Chat. Subscribe to Helen Lewis Has Left the Chat on BBC Sounds.