Customers are paying more for their credit cards in current economic conditions as companies try to increase profits by cutting interest-free periods, levying more balance transfer fees and upping the cost of withdrawing cash.

Credit cards offer a lifeline to many “credit hungry customers” who have little choice other than to use their plastic to make ends meet as other lines of credit dry up. Unsecured personal loans have dropped by £132million, but credit card lending has moved in to fill the gap, increasing £130million in the same time.

Interest-free periods have been cut by 11 per cent in the last month, costing consumers an extra £3million in interest payments; almost a third of credit cards have cut the interest-free period from 56 to 50 days for new customers.

More than 90 per cent of credit cards now charge a fee for balance transfers, compared to just 29 per cent of companies in 2005, costing the 7.9 million consumers a year that get balance transfer credit cards a total £412million. Fees have also soared 373 per cent, costing each customer an average £52.09, up from £11.02.

Interest rates on purchases have risen from 16.4 per cent to 17.7 per cent, costing £481million a year. Cash withdrawal fees have also increased, up 41 per cent to 29.97 per cent compared to 21.22 per cent in 2005, costing consumers £161million in interest each year.