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"Credit card firms push up rates in time for Christmas"

By admin | December 16th, 2009 | Credit Cards

According to recent reports a number of credit card providers in the UK have been pushing up the rates charged on their cards in time for the Christmas period, with some pushing up rates by as much as 7 percent.

Capital One is one of the credit card firms to have made this move, and has tried to defend its actions by stating that the reasoning behind the interest rate hikes is to reflect the higher risk of some customers combined with current market conditions.

Officials have said that some consumers could end up paying a massive 40 percent interest on their Christmas purchases if they use these high interest cards unless they are able to pay off the balance in full before interest starts being charged. Some may have been planning to use their cards to pick up bargains in the January sales, but again these bargains will turn into costly items if they end up having to pay 40 percent interest.

Customers have described the card hikes as ‘legalised extortion’ and have expressed anger over the credit card provider’s decision to increase rates in this way with Christmas approaching and many consumers already struggling in terms of their finances.

Recently Labour government officials including Gordon Brown and Alistair Darling said that they would be cracking down on credit card firms to ensure that customers were treated fairly, and these moves are said to have made a mockery of these efforts.

An official from Capital One said: ‘Due to current market conditions, we have had to increase rates for some customers. As a full spectrum lender, the interest rate increases we have made are based on our customers’ risk profiles. The economic environment has changed dramatically and we must adjust rates to account appropriately for the increased risk of lending in an economic downturn.’

Tags: interest, Credit Cards, debt, universal default, christmas, credit card fraud

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