Wednesday 17 February 2010

Credit Card interest rates going up!

So, it was announced today that the average interest rate on credit cards has risen to over 18% despite the bank base rate being just 0.5%.

This means that for those of us with credit card debt in excess of £5000 we can enjoy an annual repayment of at least £2289.

We are told that this is in response to banks having to cover the costs of ''bad debts'' by consumers who are unable to make the repayments. All very well you might say but customers of capital one had been issued a warning recently stating that the interest on their cards was to almost double overnight from 8.01% to 15.31%.

Do we think this is a fair response to a worsening crisis or a further display of banker greed enveloping us.

I think the latter. Either capital one suddenly looked at their balance sheet and realised that over night twice as many people started to miss payments to their debts and drastic action should be taken immediately (unlikely) or they saw an opportunity to increase profit and did so with typical ruthlessness.

And if you where thinking now may be the time for a balance transfer then think again. A sharp tightening of lending criteria means that for most of us the days of interest free credit for the diligent are long behind us.

With debt and the cost of debt set to rise and lending options reducing I see a few more years of painful repayments ahead of us all.

There are of course other options if it all gets a bit much. Speak with to find out what's available.

That may be shameless promotion but with free no obligation advice, how can it hurt?