Credit card customers could be among the forgotten casualties of the credit crunch according to Fool.co.uk. Although there is constant speculation over mortgage rate changes when the Bank of England base rate, credit card rates are very rarely touched upon.
Head of personal finance, David Kuo, said: "The Bank of England has trimmed interest rates three times since December 2007. But, despite the cuts, interest charges on outstanding credit card
balances remain disgustingly high."
According to Mr Kuo, consumers are currently stuck with approximately £64 billion of outstanding credit card debt
, three quarters of which incurs interest. "The typical annual percentage rate (APR) on popular credit cards is around 16 per cent, which is over three times higher than the Bank of England base rate," he commented.
"This means we are forking out £7.7 billion in annual interest payments - around £250 for every credit card holder a year."
And Mr Kuo points out that customers can speak to their credit card provider about this if they consider their rate to be too high. "APRs are not set in stone, and are open to negotiations," he said. "Every one per cent reduction in APRs represents an extra £74 million that go into consumers' pockets to ease the credit crunch. It is a fraction of the £50 billion bailout that lenders are grabbing from the Central Bank, which is, after all, our money.
"Fool.co.uk therefore urges card holders to ask their providers for a reduction in interest rates. Banks may want their cake and eat it, but we deserve a slice too, since we are paying for it."
© Fair Investment