A recent report has shown that whilst the Bank of England has cut the base interest rate three times between December last year and April this year, and has kept the base rate on hold since April, many credit card firms have been increasing the interest charged for borrowing on their cards, making it increasingly difficult for consumers to spend on their credit cards at a time when many probably need to rely on their cards more than ever before due to the current difficult financial climate.

In the last six months industry officials claim that the interest rates charged on many credit cards has jumped to 17.4%, which is an average increase of 0.6% over this period.

Over seventy two credit cards are thought to now be charging interest rates of 17.9% or higher, with some cards, namely for those with damaged credit, charging an astonishing 40% or more in interest. With just fifty nine credit cards charging 17.9% or more six months ago officials have noted how rapidly card providers have been increasing their rates.

One industry official stated: ‘Homeowners have been the most visible losers in the credit crunch but credit card customers are also sharing the pain. Average rates of 16.8% were bad enough in February but despite two Bank of England rate cuts, which reduced borrowing costs by half a point, credit card average rates have increased by 0.6 of a point.’

He added: ‘Mortgage customers might complain about rates of 6 or 7% but for credit card customers the charges are much higher. And with some cards charging more than 40% it really seems like the sky is the limit.’