APRs on cards go above 18%

05/06/2009

A new report showed yesterday that APRs on credit cards continue to become more costly, despite all-time low Bank of England interest rates.

Moneyfacts.co.uk said that the typical rate on credit cards has risen to over 18 per cent during the past month.

Meanwhile, the Bank of England lending rate, at which the institution lends to commercial banks including credit card providers, has stayed at just 0.5 per cent.

This huge margin can be explained by cost pressures on card firms caused by the economic downturn, Moneyfacts.co.uk explained.

Michelle Slade, analyst at the site, said: "Rising unemployment means that the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates."

She added: "Competitive credit card deals can still be found on the market, with zero per cent balance transfer deals available for 16 months and zero per cent introductory purchase deals for 12 months, but with the increased risk of default, only those with exemplary credit histories are likely to be accepted for the best deals."

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle,

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