Credit card costs have risen as the base rate declines

11 Nov 2008

Credit card firms have upped their costs since May even though the Bank of England base rate has significantly decreased in that time.

This is the finding of a survey by Defaqto of 240 cards for the Independent.

Since May, the average interest rate on a card has risen by 0.4 per cent even though the base rate has gone from five per cent to three per cent, making borrowing cheaper than it has been for more than 50 years.

The NatWest card has gone from 13.9 per cent to 16.9 per cent, while the HSBC card and the Virgin Money Mastercard have increased by one percentage point to the same figure.

David Black of Defaqto said it is probably the result of card companies trying to regain losses on bad debts, consumer use of zero per cent balance transfer deals and increasing fraud.

Meanwhile, Times business editor David Wighton wrote in the paper that Britain's consumer boom had been "fuelled by ballooning credit card debt".

 

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