Although there is a static interest rate adopted by the Bank of England, credit card providers have raised them more than 2% since January. The current interest rate average is the highest registered for the last 13 years.
The Bank of England’s proposed interest rate kept a 0.5% level for more than two years but credit card providers steadily increased from 0.6% to 2% and even more. There is now a 19, 1% average interest rate according to a study made by moneyfacts.co.uk.
The Bank of Scotland and the Bank of Halifax represent the peak of the current rise in interest rates. Both of the banks belong to a common group which is run by the taxpayer. NatWest was saved by the taxpayer after it got into a period of financial crisis in 2008. Now its rates went up by 1%.
Michelle Slade from Moneyfacts said: “At the start of 2011 card providers moved to a positive order of repayments as recommended by the Office for Fair Trading, which has dented the revenue levels they can earn from customers. Card providers have also been hit by the PPI ruling, which has seen them having to repay money to customers deemed to have been mis-sold the insurance.”
Ms Slade believes that this increase will not stop for the time being and urged people to take care of their own balances in order to keep an eye on the interest. If this is not the option for some people, the spokeswoman from Moneyfacts recommended choosing another credit card provider that offers a better deal.
“Providers hope to bank on customers’ reluctance to keep switching and can claw back the lost interest during intro periods once they end,” she added.
The best deal is currently offered by Barclaycard even though the interest rate on its Platinum Balance Transfer Visa got up to 17.5%. The card offers balance transfer at no cost whatsoever. This is only valid for a period of about 20 months.