Related Credit Card Article

"Credit card costs still spiralling says expert"

By admin | July 12th, 2008 | Credit Cards

Interest rates in the UK have been cut three times since December of last year, with the base rate falling to 5% from 5.75%. Since April the base rate has been held at 5%. However, whilst the base rate is now the same as it was in 2006 following the recent cuts, industry officials are concerned that credit card interest rates and charges are still spiralling, putting many cardholders at risk of getting into increased debt.

One industry official, Michelle Slade, stated: “With increasing costs on all household bills, many people are relying on their credit card to get by each month. But these people are going to find themselves out of pocket as purchase and cash rates, along with charges, continue to increase. Since the beginning of the year there have been numerous increases to rates and charges, with some cash rates being increased by over 7% and purchase rates by as much as 3%.”

She continued: “The number of increases to purchase APRs is quite phenomenal. Normally credit card providers avoid such increases as these are the rates customers see first. It goes to show just how tough credit conditions have become for the institutions and this is being passed onto consumers. For example anyone with £5,000 of purchases on the Nectar Credit Card AMEX repaying the minimum 2.5%, min £5, the 3% increase will find themselves paying an additional £1,823.75 in interest over the life of the debt.”

Slade added that it was important to look for the right card in order to keep costs down. She said: “The first thing to do when looking for a new credit card is to look at how you will use the card. If you have an existing debt on a card, it may be worth considering a 0% balance transfer deal. Currently balance transfers best buys are topped by Virgin Money’s MasterCard which offers 0% for 15 months. Alternatively, if you are looking to make some new purchases, you may wish to consider a 0% introductory purchase deal. HSBC’s Bank Credit Card MasterCard is currently offering 0% for 12 months. Anyone looking for a low rate card will find Barclaycards Simplicity Visa at 6.8% an attractive deal.”

Recent additions:

• Consumers not careful enough over plastic card security
• Rise in insolvency levels fuelled by various factors
• Defaults on credit cards may rise
• Rise in credit card complaint levels
• Is the global credit crunch going to affect your lifestyle?

Tags: credit card costs

Related Articles:

• Rates on credit cards at highest level in two years

  According to industry experts a series of widespread increases has resulted in credit card charges in the UK soaring to their highest level in two years. Although the base interest rate has been slashed from 5 percent last October to just 0.5 percent by March of this year, credit card rates and charges have been...

• Credit card costs continue to increase

  Recent results from a survey have shown that credit card costs have continued to rise even though the base rate has dropped dramatically over recent months. Since the start of August the average rate of interest on credit cards has rocketed according to reports, and this has resulted in outrage from many consumers and industry...

• Credit card borrowing much higher than in 2006

  Over the past few years the interest rate has been fluctuating a lot, with five interest rate hikes of 0.25% each between August 2006 and July 2007, and then three interest rate cuts of 0.25% each between December 2007 and April of this year. However, in a recent report industry officials pointed out that the...

• AMEX interest rate rockets

  Recent reports have shown that one major credit card provider has increased the interest rate on one of its credit cards to over thirty times the base interest rate, charging a massive 46 percent APR on the card. The astonishing interest rate has been applied by American Express on its British Airways Premium Plus credit...

• Defaults on credit cards may rise

  There are concerns from some industry officials that default levels on credit cards amongst UK consumers could rise, with households already struggling to try and keep on top of debt and financial commitments, with many finding that their income no longer comes anywhere near covering their outgoings. With an increasing number of households being tipped...

Other Recent Articles

Finding the right credit card for Christmas shopping

Although it may seem a while before Christmas swings around it often comes around far faster than we imagine, and...

By Reno | September 9, 2010 | Read More

New credit card launched by supermarket giant

Consumers in the UK have a wide range of credit cards to choose from these days, and there are cards...

By Reno | September 9, 2010 | Read More

Interest free purchases with the Tesco Clubcard credit card

Making purchases on a credit card can work out to be very costly for those that have high interest credit...

By Reno | September 9, 2010 | Read More

Generous interest free period on balance transfers from Natwest

Many consumers are keen to save money on their borrowing, such as on their credit card borrowing, but with credit...

By Reno | September 9, 2010 | Read More

Improvements to credit card lending

According to recent reports July saw improvements when it came to credit card lending in the UK, which many believe...

By Reno | September 2, 2010 | Read More