Credit card rates at highest in two years
Credit card interest rates are at their highest in two years, despite the Bank of England base rate falling to its lowest level in history.
Average annual interest rates on credit cards are 1.1 per cent higher than two years ago - at 17.6 per cent for purchases and 24.99 per cent for cash advances.
The APR on purchases has risen 0.9 per cent, for balance transfers it is up 0.7 per cent and on cash advances the rate of interest is up 1.7 per cent on two years ago, according to data from MoneyExpert.com.
Sean Gardner, director of MoneyExpert, said: "This really is a case of the rise and rise of credit card charges.
"Even when we started monitoring average credit card fees they were already around 16 per cent - so to see them continue to increase is testament to how much the card companies feel they can get away with.
"Credit is just like cigarettes and alcohol - it has become a highly sought after commodity and that means prices will go up until we've had enough."
Michelle Whiteman, at the payments association APACS, explained interest rates on some cards were rising because in the current economic situation the risks for credit companies on offering open lines of credit were increasing.
"We have seen over the last 14 years rate are down," she said.
"They have risen slightly, but in the current climate risk has risen and firms must factor this into the cost."
However, she explained good credit card deals where still out there and consumers should shop around for the best deals.
She added six out of ten customers pay off their balances in full each month, so customers should not just focus on the APR of a card, but also other charges.
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