Banks' credit card margins set record

THE margin between the base rate and the interest charged on credit cards has reached an all-time high.

New Bank of England figures show that the average credit card rate reached 16.26 per cent last month, up from 15.89 per cent in November. The rate was the highest since September 2006, despite an all-time low Bank rate that gives lenders an average margin on credit card rates of 15.78 per cent.

The BoE figures also show that while the average cost of a two-year fixed-rate mortgage for borrowers with a 25 per cent deposit fell by 0.04 per cent last month, instant access savings accounts offered an average interest rate of just 0.17 per cent.