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Credit cards charging up to 46 per cent interest
Sri Carmichael, Consumer Affairs Reporter9 Jan 2009
AMERICAN Express has increased the cost of borrowing on one of its credit cards to 46 per cent - more than 30 times the Bank of England base rate.
The company now charges 46 per cent APR on the British Airways Premium Plus card, making it Britain's most expensive credit card.
Consumer groups said the cost of borrowing on some credit cards had now lost all touch with the base rate.
A series of other cards also have APRs above 35 per cent - despite interest rates being at the lowest level since the Bank of England was set up in 1694.
Other cards include Virgin Money American Express at 37 per cent and Citi MasterCard at 41 per cent.
Consumer group Which!'s credit card expert Martyn Saville said the Amex rate was "ridiculous".
He said: "This is over 30 times base rate. Credit card interest rates now bear no resemblance to Bank rates - it is just about what companies think they can get away with. Even at 19.9 per cent it is far too high."
The Amex rate was sent soaring from 36.6 per cent to 46 per cent because the issuer increased the annual charge paid by customers from £120 to £150. APR calculations take into account the annual fee, prompting the vast rise.
Four of the five cards with high APR have annual fees of up to £300. Amex said the interest charged on transactions had also risen, from 16.9 per cent to 19.9 per cent.
An Amex spokeswoman said fees had not gone up for the last seven years: "We've held off making any fee increases, however the cost of providing these products has increased. Rather than reduce the benefits on offer, we've slightly increased the fee."
The card offers British Airways frequent travellers benefits including 1.5 Airmiles for every pound spent on the card. British Airways said the APR was a matter for Amex.
Reader views (8)
I've just been checking my Rate on a HSBC Gold card.
When I was encouraged to take it out a couple of years ago, I'm certain it was 0% for 6 months, then an apr 18%.
They are now charging apr 28%. I'm sure this can't be right. This is just a normal HSBC credit card, not amex charge card. I've been with HSBC for 35 years, but think they are taking the pee now! I've phoned, but they say that they can not discuss it over the phone and I need to write in! Another delaying tactic?
HSBC seem to have joined the loan sharks!
- Paul, London, 17/01/2009 10:34
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Great news! Well done, Amex. At least now, people won't be tempted to spend money they don't have. Those who can pay money back to Amex won't mind the high interest rate because they'll pay the amount back immediately after purchase. We should be encouraging this sort of thing, to teach people to be responsible with their money - pay cash and to save up for items instead of flashing plastic all the time. Otherwise in another 15 years time, we'll be in exactly the same situation as we're in now. I hope other banks follow suit.
- Ms, London, 12/01/2009 01:02
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Francis and NH - absolutley agree.. I have this card too and love it. Pay it off in full and on time and earn 1.5 miles for each pound spent.. quickly earn free first class tickets on BA and fly in style...
- Joanna, london, 09/01/2009 17:48
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There's always been a big gap between the base rate and credit card interest rates but now it is beyond ridiculous. On my savings I'm getting practically nothing however my Barclaycard is charging almost 20% interest when the base rate is at it's lowest rate ever. Ludicrous.
- David, London, 09/01/2009 15:08
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I have one of these cards. Amex isn't charging 46% APR. The APR is 19.9% + a fee of £150. Get your facts right.
- N H, London, UK, 09/01/2009 14:50
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Can these Credit Card Companies not be charged with offenses under the Usury Laws ? Apart from being completely amoral they must be breaking the law somewhere as an APR of 46% is an affront to decency and puts them on a par with Loan Sharks.
- Francis Asselberghs, UK, 09/01/2009 13:18
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In recognition of the reductions in interest rates set by the Bank of England, I was told yesterday by Lloyds TSB that the rate charged on my credit will be doubled yes doubled to 34% per annum. When I phoned the bank to ask what possible reason could be given to justify such unfair trading when my repayments are up to date I was told to like it or lump it! So now we know what the banks are doing with the huge subsidies received from taxpayers - it is being lent at ridiculous rates of interest to boost their profits even more. Sheer greed.
- Denise Hall, London, 09/01/2009 13:17
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I have one of these cards and am well aware of the outrageous interest rate, which means I always pay it off each month. Maybe all credit cards should have this Sword of Damocles rate to discourage profligate spending?
- Nobby Clark, Perth, Scotland, 09/01/2009 12:00
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