Credit Card Rates 'Raised to 34.9%'

28/07/2008

Many UK credit card customers are facing rate hikes, bringing their AER to up to 34.9 per cent.

MBNA, which manages cards for many British high street banks, also stands accused of hiding the steep increases by listing the rates in monthly rather than annual terms, the Guardian reports.

Card brands which have seen recent rate rises imposed on some customers include Abbey, Alliance & Leicester and Virgin Money, all of which are owned by MBNA.

Speaking to the newspaper, Abbey customer Anthea Gerrie said that she was told by the firm that her new rate will stand at 2.5292 per cent per month - or 34.95 per cent per year.

Ms Gerrie, who has since cancelled the card, commented: "[It] is such a whopping rate that nobody who has a decent credit rating would consider it for a minute - I've no idea why they have done this."

A spokesman for the card provider said that many of its cardholders currently paid rates of zero per cent and that its average annual rate stood at "around 15 per cent".

Kevin Still, director of EuroDebt, added: "Many consumers have historically relied upon being able to make minimum payments to their card issuers and use the available balance as disposable income, as rates rise many people are now simply covering the interest payments with the effect that they need to find additional income to cover the shortfall."

Tags;

Regional Debt Advice; Debt Advice Leicester,

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