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"AMEX interest rate rockets"

By admin | January 27th, 2009 | Cash Back & Rewards

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 card, resulting in the card becoming the most expensive one in Britain.

Industry officials are now worried that the interest rates that are being charged on some credit cards bear no relation whatsoever to the base interest rate. Although the base rate is now at its lowest level in the history of the Bank of England, which spans over three hundred years, having fallen to 1.5 percent, the interest rates being charged on some credit cards are sky high, with a range of credit cards charging over 35 percent interest to borrowers.

An official from the consumer campaign group, Which?, described the interest rate as ridiculous, stating: ‘This is over 30 times base rate. Credit card interest rates now bear no resemblance to Bank rates – it is just about what companies think they can get away with. Even at 19.9% it is far too high.’

The reason behind the sharp rise in the American Express card APR is that the lender has increased the annual fee that customers are charged – which is taken into account when calculating the APR on a card – from £120 per year to £150 per year.

An official from American Express stated: ‘We’ve held off making any fee increases, however the cost of providing these products has increased. Rather than reduce the benefits on offer, we’ve slightly increased the fee.”

Tags: american express, american express british airways credit card

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