Credit card interest has risen as base rate slashed

Published on Monday 6 April 2009 21:08

INTEREST rates charged on credit cards are at their highest in two years despite recent cuts in the Bank of England base rate, according to new research.

Credit card users are paying an average 1.1 percentage points more in interest than two years ago, even though the base rate has fallen from 5.25 per cent to a record low of 0.5 per cent over the same period, said comparison website MoneyExpert.com.

The increase will have generated an extra 713 million in annual income for credit card providers, the group estimated.

The biggest hike has been to interest rates on cash advances, up by an average of 1.7 points to 24.9 per cent since April 2007. Credit card users are also paying an average of 0.9 points more on purchases, at 17.6 per cent, and 0.7 points more on balance transfers, taking the average rate to 16.79 per cent.

Sean Gardner, director of MoneyExpert.com, said: "Even when we started monitoring average credit card interest rates they were already around 16 per cent, so to see them continue to increase is testament to how much the card companies feel they can get away with."