Credit cards interest hits high point

By Sarah Engle, Wed 17 Feb 2010 - Published in Credit Cards

Banks are applying high charges to credit cards in a misguided bid to stop people borrowing, an expert has suggested.

Recent research from Moneyfacts.co.uk found that rates on credit cards are currently at a 12-year high, with the average standing at 18.8 per cent.

Commenting on the findings, Ark Financial Planning director Phil Perry claimed that raising credit card rates could be a way of stopping people attempting to borrow more money.

"They think they might be doing people a favour by increasing the rates and stopping them borrowing. It is people that are still in that vicious circle that are going to get stung," he explained.

Mr Perry added that some people using credit cards have no choice but to put money on them and noted that higher charges will leave them in a worse place than they were before.

Moneyfacts spokesperson Michelle Slade said that people should look for competitive balance transfers and introductory purchase deals to reduce the amount their pay on credit card interest.

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