Credit Card Interest Rates Up to 13-Year High
September 18, 2019
There has been a notable rise in the average APR associated with credit card deals over the course of recent months, which represents potentially bad news for debtors across the country.
According to the financial information company Moneyfacts, the monthly minimum payments being demanded by credit card providers increased between June and the end of August this year.
By September, the average APR being charged on credit cards had reached 24.7 per cent, which is the highest average figure recorded by Moneyfacts since it first started keeping track of these numbers in 2006.
There are concerns that some people who use credit cards to cover the costs of Christmas in the coming weeks will find themselves faced with onerous debts by the time the New Year comes around.
Moneyfacts’ data suggests that the average APR rates charged to credit card users in the UK have been rising steadily since September 2017, when the average annual interest rate charged was 22.9 per cent.
The financial information company notes that the lowest rate credit cards available are generally becoming increasingly more costly as a means of borrowing for consumers.
“Consumers who turn to credit cards for their everyday purchases will find that the cost to borrow is starting to rise, as the most lucrative low rate cards have worsened,” said Rachel Springall, a finance expert at Moneyfacts.
“In fact, over the past quarter, we said goodbye to the lowest rate purchase credit card on the market and have seen rates increase on these lucrative offers.”
On the other hand, there are indications that a growing number of borrowers are taking steps to move their debts to interest-free credit card deals where they can, with UK Finance data showing that the number of credit card balances that bear interest is in decline.
The figures suggest that around 53.4 per cent of all credit card balances required borrowers to pay interest as of June 2019, which is down from 54.6 per cent 12-months prior.
The advice from Moneyfacts’ experts is that credit card users should “take every opportunity” to pay off more than the minimum amounts demanded of them by their lenders each month.