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Sunday 25th of April 2010
February 16, 2010    

Credit card interest rates soar to 12-year high

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by Kay Murchie

New research has revealed that millions of credit card holders could face severe debts after card providers have put interest rates up to a 12-year high.

The Bank of England’s base rate has been at the historically low rate of 0.5% for almost a year but despite this, average credit card interest rates have risen to over 18% - the highest level since 1998.

According to many experts, providers are passing on the cost of a rise in defaults - reflected by the squeeze on British households due to rising unemployment.

Financial advice website, Moneyfacts, which conducted the research, accused lenders of “sticking the knife in” on households who are already struggling under difficult financial circumstances.

Michelle Slade of Moneyfacts said: “The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts.

“This increased risk continues to be passed on to both new and existing credit card customers through higher rates. Other charges such as balance transfers, cash withdrawals and foreign transfer fees also continue to go up, leaving customers paying more across the board,” she added.

The Government recently announced proposals to crackdown on credit card companies in an attempt to tackle consumer debt.

The results of the consultation is due to be published next month.

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