Credit card interest rates on the rise

The average credit card purchase interest rate is rising, now at 18.1% compared to 16.3% two years ago.

Despite the fact that the Bank of England base rate stands at its lowest ever at 0.5%, and it has just been announced it is being kept at this level this month, credit card purchase interest rates are on the rise.

Credit card providers are not just raising rates, they are withdrawing competitive deals and launching new cards with higher APRs.

According to Moneyfacts.co.uk, in the last 6 months alone 12 credit cards have increased their interest rates, including Amercian Express, Bank of Scotland, Halifax (part of Lloyds Banks) and the Nationwide Building Society.

Michelle Slade at Moneyfacts commented ‘Rising unemployment means that the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates. If customers are struggling with repayments, unsecured lending is one of the first casualties as customers fight to keep hold of their property.’

There are still some good, competitive credit card deals around though.

The Virgin credit card for example offers 0% on balance transfers for the first 16 months and 0% on card purchases for 3 months.

MoneyHighStreet recently did a review of the Virgin credit card which you may find useful.