Credit card rates hit 13-year high
With prices of everything from petrol to food already soaring, people across the UK are being further squeezed by credit card rates that have risen to the highest level for 13 years.
The average credit card interest rate is now 18.9 per cent, a massive 18.4 per cent above the Bank of England base rate.
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Once you take into account annual fees, some banking giants are effectively charging more than 50 per cent for the privilege of holding a credit card, according to the figures compiled by Moneyfacts.co.uk
That would be all very well if those swelling coffers were going to good use... but that is not the case.
Liberal Democrat Treasury spokesman Lord Oakeshott told the Daily Mail: "The banks might have an excuse for squeezing credit card borrowers till the pips squeak if they were pouring the profits into backing small businesses or first and second-time homebuyers. But they're not."
Michelle Slade, spokesperson for Moneyfacts.co.uk, added: "The banks' priorities are bonuses first and big borrowers second, with ordinary customers and taxpayers a bad third."
Ms Slade explained that those who repay only the monthly minimum on a £5,000 credit card debt can now expect to pay £2,360 more than they would have done in February 2006.
And with families resorting to credit cards to pay the rent or mortgage, many will find themselves with rapidly snowballing debts.
To further add to the problem, credit card lenders (as with mortgage lenders) are insisting on much tighter criteria than before the recession, making it harder for customers to switch to a better rate.
A spokesman for the UK Payments Council explained that credit card APR should not be compared to the Bank of England base rate, saying: "A credit card APR is not an interest rate as it is obliged by legislation to reflect the total cost of credit.
"Even when interest rates are low, the costs of fraud, bad debt and operating an unsecured open-ended line of credit continue."
What do you think? Should the banks be lending more to benefit homeowners and small businesses? Leave your comments below...
