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Credit Cards & Loans

Credit card interest rates on the up

Emma Lunn
Written By:
Emma Lunn

The average credit card interest rate is now 23.1%, the highest level in 18 years.

The average quoted household rate on credit cards reached 23.1% in June 2023, the highest level since December 1995, according to analysis of Bank of England data by Freedom Finance.

The personal loan company said that average rates on lending products had registered notable increases through June as fears over inflation linger.

Through the first few months of the year, average rates on credit cards and personal loans had either plateaued or dropped from the highs of 2022.

However, in June 2023 average quoted credit card rates rose from 22.76% to 23.10%.

This rise in the cost of credit cards was mirrored in the personal loan sector, but rates remain far below those for credit cards.

Personal loan rates

The typical interest rate on a £10,000 personal loan increased from 5.85% to 6.02% in June, marking the highest average rate in a decade.

Rates for £5,000 personal loans recorded a smaller rise with rates creeping up from 10.15% to 10.18% in June and have returned to similar levels last seen in December 2022 (10.19%).

Andrew Fisher, chief growth officer at Freedom Finance, said: “After a period of calm, it appears consumer credit rates are now once again on an upward trajectory with credit cards reaching their highest levels in nearly 30 years.

“While personal loan rates have ticked up slightly, they still offer borrowers the ability to access the credit market at more attractive rates. It could lead to increasing demand for personal loans as borrowers hunt for products to support their financial situation amid squeezed household budgets.

“It emphasises the need for consumers to exercise best practise when looking for lending products – even in a rate-rising environment there are likely to be products that suit people’s individual circumstances and needs.”