Get your card provider to cut your interest rate

June 27th, 2008 • Related • Filed Under

An industry official has suggested that many customers could be paying for too much interest on their credit cards, stating that credit card companies have failed to cut the interest rate on cards despite three recent cuts in the base rate from the Bank of England. In fact, industry experts state that credit card companies have actually been increasing the cost of credit card use by raising interest rates, fees, and charges relating to credit card use. Some officials have now said that consumers should try and get their rate reduced by contacting their credit card providers.

According to financial industry professionals from Fool.co.uk the effects of the global credit crunch could be eased for consumers if they contact their credit card providers and get the rate reduced, as this could save consumers millions of pounds altogether. Officials added that credit card interest rates are not set in stone, which means that there is scope for change.

One official from the group 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.”

He went on to state: “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. 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.”

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