One in three Brits hit by credit card rate hikes

28 July 2008 / by Daniela Gieseler
Nearly a third of credit card holders have been hit by APR increases on their existing credit cards in the last 12 months, new research from price comparison website moneysupermarket.com has found.

The main culprits were Egg, Capital One, Lloyds TSB, MBNA and Barclaycard, with Egg being responsible for more than one in ten increases despite only having a market share of 4.7 per cent. Some customers have found themselves paying 34.9 per cent interest on their credit card.

Steve Willey, head of credit cards at moneysupermarket.com, blamed the companies for irresponsible practices: "Firms writing to customers telling them their APR is about to increase will only exacerbate the debt problem in this country - especially given recent statistics showing the average cardholder has over £5,000 of easy credit at their fingertips.

He said it was outrageous that, for example, at the end of their introductory excellent 0 per cent APR credit card deals people were faced with an APR of 27.9 instead of 15.9 per cent.

"Credit card companies should play fairer with customers," he urged providers. "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."

Worryingly, on top of the 31 per cent reporting interest rate increases, a further 27 per cent did not even know if there had been any changes to the interest rates they paid on their credit cards.

Steve Willey added: "It is concerning that people aren't paying closer attention to their credit cards. 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.

"Despite all the doom and gloom there are still many excellent zero per cent purchase or balance transfer deals on the market for those with a good credit rating," he continued. "Customers should look closely at their current card and see how it compares with the rest of the market."

© Fair Investment Company Ltd