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Credit card interest rates creeping up
Monday 17th November 2008Credit card providers are getting into the 2008 Christmas spirit – and that’s the spirit that sees the cost of a 10kg turkey rise from £40 to £70 this year – by surreptitiously hiking up interest charges.
Although the bank base rate has been slashed to a fifty year low of 3%, interest rates have gone up from an average of 17.2% to 17.6% since May, a study of 240 cards by analyst Defagto has found.
Some card charges have increased far more than others, for instance, NatWest’s credit card charge has gone from 13.9% to 16.9% since earlier this year.
Prime Minister Gordon Brown has spoken out against the rise in credit card rates, pledging to hold a Downing Street summit to discuss the pressing issue with the credit card firms: “I think we have got to bring the credit card industry in to talk to them to join with us in establishing clear principles to apply to the costs people face on their existing debts.” He commented.
The banks’ payment association, Apacs, that also represents credit card providers, put the growth in interest charges down to card rates not being set according to the bank base rate, adding that the interest charges cover administrative costs as well.
However, David Black of Defagto has stated that credit card companies are pushing interest rates up in an effort to recoup the cost of bad debts, increasing levels of fraud and customers making use of 0% balance transfer discounts.
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