You are here: Home - Credit Cards & Loans - News -

Average credit card interest rate jumps to 23.1%

Written by:
The cost of credit card debt has gone up, with the average APR hitting 23.1% over the last quarter up from 22.9% in April, according to data firm Moneyfacts.

Credit card purchase rates, cash per annum rates (the interest rate charged when you withdraw cash using a credit card) and cash withdrawal fees (the transaction charge for withdrawing cash) have also gone up.

This comes at a time when credit card borrowing has risen by £3bn year-on-year. Total credit card debt in the UK sits at £71.1bn, which translates to £2,613 per household on average – up from £68bn, or £2,521 per household a year earlier, statistics from The Money Charity show.

Bank of Scotland, Halifax, HSBC and Lloyds Bank all increased the interest rates charged on standard purchases and cash by 1%, while Tesco Bank increased its cash withdrawal fee by 0.99% on its entire credit card range.

“These increases might not seem small, but it’s worth noting that all these changes took place over the last three months alone, and included activity from some well-known brands,” said Rachel Springall, finance expert at Moneyfacts.

“It’s unsettling news at a time when consumers would not be expecting interest rates to rise, especially if credit cards are their lifeline.”

Worryingly, many consumers seem to be struggling to pay off their debt – £318m was written off by card providers in the first three months of the year. This means the company effectively sells the debt for accountancy purposes but the borrower is still obliged to pay the debt.

Springall said: “While credit cards are considered a common way to carry debts or switch them to an interest-free deal, this is only a temporary fix that simply buys a little more time to pay debts back. Without diligence, a growing debt could overwhelm customers and dent their chances of being approved for important financial milestones such as a mortgage. If in doubt, customers should seek out help, for instance a debt charity like StepChange, for vital support.”


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

Low-income pensioner? You could gain £3k top-up

Hundreds of thousands of retirees struggling with a low income are missing out on Pension Credit worth £3,300...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week