Credit Card APRs Have Increased Despite Low Base-Rate

The Bank of England has today announced that the bank base-rate will remain at 0.50% for the 27th consecutive month.

However, analysis by independent financial research company Defaqto has found that the cost of borrowing on the average credit card has become progressively more expensive over the last four years, despite a falling base-rate.

According to Defaqto data, the average representative APR for credit cards is currently 18.7%, which has increased from 16.6% since July 2007 – when the base-rate was 5.75%.
David Black, Defaqto’s Insight Analyst for Banking, said:

“Credit cards have become much harder for people to obtain over the course of the last few years and, at the same time, we have seen a significant increase in the standard interest rates that they charge.

“Providers are generally much more prudent when deciding whether or not to accept credit card applications. Reflecting this, personal pricing – whereby cardholders may be charged different rates of interest for the same card based on the individual’s perceived credit risk – is now firmly entrenched in the credit card industry.

“Consumers with excellent credit ratings have an incentive to change their credit cards on a regular basis because of the generous introductory offers – in the form of 0% rate offers or enhanced introductory rewards – that are available. It is important for people to be proactive and regularly review their existing credit cards to see whether they can get a better deal elsewhere.”

Source:www.creditman.co.uk