DEMSA approved debt management
Credit card interest rates now stand at an average of 18.8 per cent, which is the highest since 1998. Rather alarmingly some customers are reportedly facing interest payments of more than 40 per cent on their credit card borrowing.
This recent hike in credit card interest rates may be seen as unfair by many UK consumers especially considering the fact that the Bank of England Base rate remains at a record low level.
Research from the financial product comparison web site Moneyfacts.co.uk found that average interest rates on credit cards in 2006 were 14.8 per cent. The increase in interest rates to 18.8 per cent today means that credit card holders with an existing debt of £5,000 now face additional interest payments of £2,289 over the life of their debt.
Moneyfacts.co.uk spokesman Michelle Slade said: 'The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts. The increased risk continues to be passed on to both new and existing credit card customers through higher rates.'
'Other charges such as balance transfer, cash withdrawal and foreign transfer fees also continue to go up, leaving customers paying more across the board.'
Research from Moneysupermarket.com indicated that 14 million consumers use credit cards to pay for every day expenses and 1 in 5 UK adults have 3 or more credit cards. Credit Card Expert at moneysupermarket.com, Peter Harrison, said: 'Holding more than one credit card can be a good idea; if you are using one for balance transfers and one for purchases, and have suitable 0% deals on both.'
Craig Gedey, Marketing Manager at Debt Advisory Line said: 'Credit card customers need to be fully aware of the increase in charges they are facing. Checking your credit card statements on a regular basis is a good way of spotting an increase in interest rates.'
'It is all very well using separate credit cards for balance transfers and purchases but as Moneyfacts.co.uk have already pointed out the increase in charges is across the board, which could catch out some customers.'
'Anyone who is struggling to keep up with repayments on their debts should consider professional debt management advice from a DEMSA approved debt Management Company.'
With reports suggesting that some of the Capital One credit cards now charge customers almost 40 per cent in interest rates you can see why it is very important to make sure you have the most competitive interest rate possible and perhaps look at a debt management plan as a way of repaying the debt should you begin to struggle with repayments.
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