Today’s “Times” reports new research which shows that millions of credit card holders are being charged the highest interest rates in more than a decade despite interest rates being at a record low level
The report notes that despite the Bank of England’s base rate being at 0.5 per cent, average credit card interest rates have risen to 18.8 per cent.
“The Times” suggests that card providers are passing on the cost of an increase in defaults caused by rising unemployment and bad debts. The charges were also a consequence of tighter Government regulation in the credit card market
Any credit card holders with a £5,000 debt, and who pay off the minimum 2.5 per cent each month, will repay on average £2,289 more than three years ago.
The last time interest rates hit today’s levels was in 1999, when the base rate was 6 per cent.
In April the Department for Business Innovation and Skills is expected to issue a government response to a credit and store card consultation which examined the re-pricing of existing debt. The consultation also considered whether credit card providers should ensure that customers repaid the most expensive debt first.