Credit card debt to 'rise'

13/01/2010

People with credit card debt could face further difficulties as credit card interest rates in December rose.

Figures from the Bank of England (BoE) show that on average, rates increased from 15.89 per cent to 16.28 per cent in the last month of 2009.

Rates are now at their highest since September 2006, despite the low base rate of 0.5 per cent held by the BoE.

The news followed a report from PricewaterhouseCoopers (PwC) which warned that credit card debt would increase in 2010.

PwC warned: "Credit will become more expensive as lenders attempt to claw back revenue lost as a result of economic and regulatory pressures."

As the cost of borrowing rose, the returns from savings look set to fall as the Bank reported rates on fixed rate bonds falling for the fourth month in a row to 2.51 per cent.

Kevin Still, director of EuroDebt commented: "Whilst rates have generally risen, some leading card issuers have raised their rates hugely to over 20 per cent APR.

"This will have the effect of extending the rate at which people clear debt and cause major debt problems if minimum payment levels have to increase in 2010."

Tags; Current UK Economy,

• Share
• 
• 
• Store
• 
• Follow
•