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Credit card rates rise as interest rates fall
Sri Carmichael11.11.08
BANKS have increased interest rates on millions of credit and debit cards even as the cost of borrowing plunged to a 53-year low, according to a report.
A study of 240 credit cards showed that while the Bank of England reduced its official bank rate from five per cent in May to three per cent this month, the cost of borrowing on cards had risen.
Research by banking experts Defaqto for the Independent showed that since May, the average annual percentage rate on cards rose by 0.4 per cent, climbing to 17.6 per cent.
Last week the Monetary Policy Committee cut rates to three per cent and Chancellor Alistair Darling said it was "essential" that banks passed the cut on. But the latest study will do nothing to allay fears that consumers are failing to reap the benefit.
Consumer website MoneyExpert.com found that rates on store cards had risen a full percentage point in the last six months, making the average rate now 25 per cent.
Reader views (6)
Please can someone advise why Government is allowing banks to do this, after the bail-out, sitting by & letting banks have BAIL out funds plus the differene in the 1% the banks are charge by the FEDS, plus gouging late fees, overdraft fees,& NOTHING is being done about all this except talk ! NOTHING, Taxpayors were promised there WOULD be help for working man with BAILOUT funds, but since it did not take months to come up with BILLIONS for the banks, I fail to see true reason why it takes months and months to get rate reductiona & help on monthly payment amount, credit card reform, for the working man Government of BOTH parties have allowed banks to LIE to consumers! My hike from 14.99% to 24.99% with no change in my status, pmt increase of $80 month --I am writing to the Federal Reserve to complain, but The Federal Reserve and the Office of Comproller General go through the motions of taking complaints, but nothing is every done except advise you banks have not broken any laws with their gouing so on and on it goes. Credit scores are 300-800 for working man, but very few people: unless you are rich or have never been laid off or have health crisis, have scores over 700 needed for decent bank loan, so I see little help for working man, except on paper. BOFA got bailout money, lays workers off, gougin working man with fees & high interest nothing is done! WHY
- Ron, Charlotte NC
Come on then Gordon Brown! Now force card companies to reduce their rates. How can any of them justify rates over 20%, or, even that much?
- Vince London, West London
Credit cards are okay if you just use them for emergencies and pay them off in full at the end of the month. Or pay for your holiday using credit card, if anything goes wrong, you're more likely to get a full refund from the credit card company. They do have their uses, but I wouldn't build up a big debt using one.
- Yvonne, Doncaster, UK
I HAD an egg card. I recently received a letter from them to say they were increasing my interest rate from 18.9% to 27.9% next month. My reaction was to clear the balance and cut up the card. There is no justification for that sort of increase when I pay my bill on time every month.
- Jane, London
Just stop using the damn things and STOP MOANING.
- P Staker, London
The only answer to these credit card companies is to STOP using them. If you spend an average of £5,000 a year using credit cards you can save £1500 a year, that is very significent. Shop with your heads not your cards, if you can't pay for it in cash then don't buy it!!
- Maria, london
