Credit card companies taking advantage of consumers

24 July 2008 / by Rachael Stiles
Credit card customers are being taken advantage of by their providers as the credit crunch bites, according to new research from moneysupermarket.com.

The study found that almost a third of credit card customers have experienced a hike in their APR (annual percentage rate) during the last 12 months, as credit card providers reign back on lending by cutting credit limits whilst simultaneously attempting to boost funds.

Some of the biggest credit card companies are among those raising their rates, accounting for a significant proportion of cardholders seeing a rise in the amount of interest they pay on outstanding balances.

Steve Willey, head of credit cards at moneysupermarket.com, thinks that the actions of credit card companies in hiking their APRs will only serve to exacerbate the UK's debt situation, especially in light of the fact that Brits each have more than £5,000 of plastic credit at their fingertips.

"Credit card companies should play fairer with customers." Mr Willey commented. "People, for example, about to come off introductory zero per cent deals and expecting to be paying 15.9 per cent have instead found themselves facing an APR of 27.9 per cent, which is outrageous.

"Increasing the interest on purchases will only make those rising food, fuel and mortgage bills harder to pay, and lengthen the time it takes people to clear their debts."

The research also revealed that more than a quarter of cardholders in the UK did not know that the APR on their credit card had increased in the last 12 months, to which Mr Willey expressed concern that people are not paying close enough attention their finances.

"If you aren't aware what your APR is you might be paying a lot more for your credit card purchases than you need to." he said, recommending that customers compare credit cards from across the market to find the best deal, because there are still competitive offers available.

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