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"Rates on credit cards should be challenged"

By admin | August 12th, 2009 | Credit Cards

A senior official from a consumer watchdog group in the UK has recently stated that credit card interest rates in the UK simply cannot be justified, and that these crippling interest rates need to be justified.

The official, from the consumer group Which?, said that in some cases lenders are charging higher interest rates to their credit card customers simply to recoup losses that they are making in other areas, such as loans, mortgages, and even current accounts.

The official, Martyn Saville, said that consumers who are charged crippling rates on interest on their credit cards should not simply accept them without question but should challenge the high rates that are being applied to their accounts.

He said that it was important for consumers to challenge overly high rates of interest because, with the base interest rate at its lowest level of over three hundred years, at just 0.5 percent, card providers simply could not justify the rates that they were charging to some credit card holders.

Mr Saville said: “There is an element of the effect of the credit crunch still carrying on because it’s expensive for them [lenders] to borrow, but the rate at which they lend to each other has come down in the last six months.”

He also predicted that in the future credit card rates would have to start coming back down again, as credit card providers would have to be more competitive in order to hang on to business, and those refusing to lower their rates would lost borrowers to more competitive rivals offering more reasonable rates of interest.

Recent research has shown that compared to two years ago, when the base interest rate was over 5 percent, the average credit card interest rate has gone up by nearly 2 percent.

Average rates have now smashed through the 18 percent barrier, even though the base interest rate is at just a tenth of the level that it was two years ago.

Tags: credit card rates, Credit Cards, interest rates

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