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Ninteen Credit Card Companies Increase Interest Charges |
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In the last five months 19 credit card companies have increased the amount of interest they charge, new figures reveal.
On April 5th the Office of Fair Trading (OFT) ruled that credit card companies were charging too much in penalty fees . Since then credit card companies have reduced charges for missed payments and the like by around half. But this has had an unwelcome knock-on effect, as 19 credit card providers have upped the interest they charge customers, some by as much as 12.1 per cent.
"Rising bad debts and the lost fee revenue have left many providers with no choice but to look for alternative avenues for income," said Lisa Taylor, analyst at comparison service moneyfacts.co.uk.
"And it seems, raising interest rates is a popular option.
"For many consumers this rise may go unnoticed – but should they take the time to look at the long term consequences, they could be in for a nasty surprise."
Moneyfacts figures show that someone owing £1,000 on their credit card would pay £342.46 in interest at a rate of 8.9 per cent, paying off the minimum amount each month.
If this interest rate increases to 14.9 per cent, then the same debt would take three years longer to pay off and cost £731.69 in interest.
And it is not just the main interest rates that are being increased.
MoneyFacts figures show 26 credit cards have increased the interest they charge on cash withdrawals since start of July. End of story
Myfinances.co.uk
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