Far from falling in line with a plummeting base rate, credit card rates have remained largely unchanged in the last 12 months, and have even risen slightly, according to market analysis from Defaqto.

Like other unsecured borrowing, credit card providers have failed to honour the falling base rate – currently at a record low of 0.5 per cent since it fell from highs of 5.5 per cent more than a year ago – and they have risen in this time.

In April 2008 when the base rate was at five per cent, the average credit card rate was 17.2 per cent; as the base rate fell steadily to 0.5 per cent by April 2009, the average credit card rate has crept up to 17.7 per cent.

In April 2010, the financial research company has found, credit card rates have continued to increase slightly, to an average 18.2 per cent, despite the interest rate remaining static for a year.

But it is not all bad news for credit card customers, says Kevin Bray, insight analyst for banking at Defaqto, since the Government brought in measures to protect consumers from racketeering credit card providers looking to profit from the nation’s debt.

“There is some good news for consumers following the recent announcement from the Government about changes to credit card rules and in particular how payments are allocated,” he explained.

From January next year, the order in which payments are allocated to credit card debt will change, so that the most expensive debt – such as cash withdrawals – will be paid before the debt with a lower interest rate, such as zero per cent balance transfers.

Mr Bray added that this measure is “expected to collectively save consumers between £300m – £500m.”

© Fair Investment Company Ltd

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