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Credit cards rates now average over 18%

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Credit card companies have hiked their rates dramatically over the last two years, but are there still good deals available?

The average credit card purchase rate has risen from 16.3% to 18.1% in the last two years, according to the financial information company Moneyfacts (www.moneyfacts.co.uk), despite a historically low Bank of England base rate of 0.5%.

In the last six months alone, 12 credit cards have had their interest rates increased, including cards from Nationwide (www.nationwide.co.uk), Halifax (www.halifax.co.uk) and Capital One (www.capitalone.co.uk).

Michelle Slade, analyst at Moneyfacts, explained: “Rising unemployment means that the risk of customers defaulting on their card repayments has increased, which is being passed on through higher rates.”

She said that there are still competitive credit card deals available but added that “only those with exemplary credit histories are likely to be accepted for the best deals.”

Chris Eagle, commercial manager at CreditChoices.co.uk, said: “There are certainly still some cracking deals out there. For example, the Virgin Money credit card (www.virginmoney.com) currently comes with a massive 16-month 0% balance transfer period, as well as 0% interest on purchases for three months and Virgin discounts.”

Eagle advises those who want to make the most of the best credit card deals to check their credit rating before applying.

He said: “Understanding what is on your credit report gives you a head start when it comes to applying for credit. There are plenty of things you can do to improve your credit rating and thus become eligible for more attractive offers.”

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