Credit Card Interest Rates average over 18%
Posted June 12th, 2009 Annual credit card rates increased last month again averaging over 18%, in spite of a lack of movement on the Bank of England lending rate. This is also aligned with an alarming trend towards a reduction in competitive credit deals.
The average rate increased from an average of 17.9% in May to 18.1% average for June, according to research from Moneyfacts.co.uk. The research attributed the increase in rates to a combination of credit card providers increasing the interest rates and cancelling deals. To make matters worse, the new cards coming on to the market recently have had higher rates and no decent offers.
The last six months have seen 12 card providers increase their interest rates, including American Express, Capital One Bank, Nationwide and Halifax, despite the Bank of England base rate falling sharply during the same period.
This rise in rates means someone with a £1,000 credit card balance who makes only the minimum paymen each month will pay an additional £204 in interest over the life of the balance.
Lending costs from the central bank have eased markedly over recent months, with the Bank rate standing at over 5% last summer. However, credit card firms have been affected financially in other ways by the financial downturn, which put the UK into recession at the end of 2008.
Michelle Slade from Moneyfacts.co.uk said:
“Rising unemployment means that the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates.”
“Competitive credit card deals can still be found on the market, with 0% balance transfer deals available for 16 months and 0% introductory purchase deals for 12 months.”
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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