Many consumers may have breathed a sigh of relief at the end of last year when the base rate finally started to come back down after a series of five 0.25% hikes between August 2006 and July 2007. Since December the base rate has fallen by 0.75% with a series of three 0.25% rate cuts. However, whilst some borrowers may have seen the rates fall on their mortgages and variable rate loans it appears that very few credit card customers have felt the benefits of the rate cuts.

Industry officials are concerned that credit card customers are being left behind when it comes to interest rate cuts, and whilst the base rate has been falling the cost of borrowing on credit cards has been rising. This is made worse by the fact that tighter credit conditions and strained household finances are resulting in a higher number of people becoming more reliant on their credit cards in order to stay afloat financially – and these people are really having to pay the price, with extortionate interest rates, fees, and charges in place.

One industry official from finance site Fool has been urging consumers to keep an eye on rates and charges on their credit cards, and has suggested that some consumers – particularly those with good credit who have a long standing history with their credit card providers – may be able to get the rate on their credit card reduced by contacting their provider. He stated that the interest rates on credit card were not ’set in stone’ and could therefore be changed at the lenders’ discretion.

He said: “The Bank of England has trimmed interest rates three times since December 2007. But, despite the cuts, interest charges on outstanding credit-card balances remain disgustingly high. The typical Annual Percentage Rate (APR) on popular credit cards is around 16%, which is over three times higher than the Bank of England base rate. Consumers carry about £64 billion of outstanding credit-card debt, of which three-quarters is interest bearing. This means we are forking out £7.7 billion in annual interest payments - around £250 for every credit-card holder a year.”

He added: “But APRs are not set in stone, and are open to negotiations. Every 1% reduction in APRs represents an extra £74 million that go into consumers’ pockets to ease the credit crunch. It is a fraction of the £50 billion bailout that lenders are grabbing from the Central Bank, which is, after all, our money. Fool.co.uk therefore urges card holders to ask their providers for a reduction in interest rates. Banks may want their cake and eat it, but we deserve a slice too, since we are paying for it.”

Those that cannot get their credit card rate reduced may wish to start looking around for a more competitive deal with another provider. However, it is also important to be mindful of the tighter credit conditions currently in place, which could make it difficult for some consumers to get a good deal on another card.