Credit card rates continue to rise

Further hikes in interest charged on credit cards mean the average rate has now gone past the 18% mark, according to research.

Research has found that providers continued to withdraw competitive deals, the average interest charged on credit card purchases had risen from 17.9% in May and 16.3% two years ago, to its current rate of 18.1%.

As many as 12 of the leading lenders, including American Express, Capital One Bank, Nationwide and Halifax, have all increased their interest rates over the past six months despite the Bank of England base rate falling sharply during the same period.

This means someone with a £2,000 credit card balance will pay an additional £408 in interest over the life of the balance if they only pay the minimum repayment each month.

Experts point to rising unemployment meaning the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates.

Copyright © Press Association 2009

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