Credit card rates continue to rise

According to a recent report credit card interest rates are continuing to climb despite the recent base rate cuts applied by the Bank of England. The base rate has been cut three times over recent months, taking it from 5.75% to 5%, but despite these cuts the interest rates charged on credit cards have continued to go up. Research shows that over the past six months credit card interest rates have gone up by an average 0.5% whilst the base rate has come down by 0.75%.

Research shows that the average rate on a credit card for purchases has risen by 0.56% to 17.12%. There has also been a rise in the average rate on balance transfer cards, which have gone up by an average 0.83% to 15.95%. Officials have stated that this is just one of the ways in which credit card providers are trying to recoup losses from both the £12 cap on penalty fees and the global credit crunch.

Other steps that card companies have taken to claw back money includes cutting the spending limits of customers, raising transaction fees and charges, and even withdrawing credit facilities from those that they class as higher risk customers.

"Most of us would normally seek out a new zero per cent deal to tide us over the bad times, but with lenders playing a cautious game, getting one of those cards is more difficult than it used to be. This means more of us will have to use our current credit card and if the 0 percent deal has expired, you'll be borrowing money at a rate of around 16 percent; be careful what you spend on the plastic because the interest will soon mount up."

Recent additions:

• Costs for credit card customers keep going up [16.05.08]
• Abbey launched innovative credit card [16.05.08]
• Increase in number of requests for credit reports [10.05.08]
• Credit card offer from M&S [10.05.08]
• Credit crunch has minimal impact on credit card transfers [28.04.08]
• Credit card providers luring customers into borrowing [19.04.08]
• Consumers outraged by credit card cuts [25.03.08]