Credit card companies still increasing rates

By Reno Charlton Staff Writer 9 May 2009

Other Recent Credit Card News & Guides Credit card companies face government restrictions (5. 5. 2009) Credit card news reports government plans to increase the restrictions that tell credit card providers how they are allowed to operate and lend money. Credit card interest payments break £9 billion pound barrier (6. 4. 2009) Abbey has released statistics that reveal a record level of interest payments breaking the £9 billion mark in the UK. Summary boxes improved as 1 in 4 cardholders do not know their interest rate (9. 3. 2009) A recent credit card news report has revealed that as many as 1 in 4 credit card users do not know the APR - or interest rate - their credit card charges them on borrowing.

CREDIT card interest rates still on the rise, despite base rate cuts and numerous government warnings.

Despite the base interest rate falling to just 0.5%, its lowest level in the history of the Bank of England, announcements were made at the beginning of April that credit card companies have still been applying credit card interest rate rises as well as increases to transaction fees and charges.

Credit card interest rates increased

It has been revealed that Halifax and Bank of Scotland, part of HBOS now owned by Lloyds TSB, have increased rates on their credit cards for many customers.

Whilst HBOS has said that most of the increases were between 1% and 4%, some customers have revealed that their interest rates have gone up by around 7%.

HBOS also said that it was continually reviewing its credit card interest rates, and that these increases formed part of that review.

An official from HBOS said: "The changes will affect a small number of our card holders and will be according to each customer's personal circumstances. The average increase is between 1% and 4% which is inside [government] guidelines and reflects what is happening across the credit card market."

Other banks have also been guilty of increasing credit card borrowing rates at a time when the base rate is falling, including MBNA and Nationwide.

Cardholder warnings

Industry officials are now warning people to check their credit card statements closely and regularly to check what rate of interest they are paying, and if they do not pay off their balance in full each month to try and move to a interest free credit card deal, such as a 0% balance transfer credit card.

One official said: "With the sneaky rate rises that some credit card firms are applying to try and recoup various financial losses consumers really need to be on their guard. If your interest rate has rocketed, as many have, then it is strongly advisable to consider getting rid of that card and switching to something along the lines of an interest free balance transfer card instead."

She added: "There are a number of deals available on cards such as these, especially for those with good credit, and making the switch could save you a fortune in interest."

Credit Card Comparison
Credit Card Guide
Credit Card News