Quarter struggling as credit card rates soar

More than a quarter of households are struggling to pay their credit card bills as banks continue to wring as much as they can from hard-pressed families, a Bank of England report has claimed.

In a worrying survey of credit conditions across the UK, the Bank found that record numbers of Britons with so-called ‘unsecured debt’ are finding their monthly repayments a ‘burden’.

The squeeze reflects the ‘higher loan interest payment costs following the increase in credit card interest rates over the past year,’ according to the Bank’s quarterly bulletin.

The survey of 2,000 households lays bare how high street lenders are extracting a high price from their credit card customers, many of whom cannot obtain cheaper forms of credit.

Although the base rate has been at a record low of 0.5% for nearly two years, the average interest charged on credit card debt is more than 33 times higher at 16.68%.

‘Interest rates on unsecured debt tend to be much higher than mortgage interest rates and appear to have been less sensitive to the changes in monetary policy (interest rates),’ said the Bank.

Some 52% of families have ‘unsecured’ debt, which is a loan not covered by specific assets in the event of a default.

Source: thisismoney.co.uk