The interest rate on nearly half of all store cards has reached 25% as the credit crunch squeezes even tighter. This has reached such a high level that the Competition Commission has indicated that customers need a “wealth warning†to be shown on their monthly bills.
Some store cards have rates on as much as 30%, despite the introduction of regulations aimed at limiting such high rates just six months ago. MoneyFacts says that rates have remained at sky-high levels despite the introduction of the new rules in May this year.
Financial research firm MoneyFacts says that card companies have responded by tweaking rates upwards, and the average rate has risen from 24.4% to 24.7%.
These increasing rates are yet another sign of the impact that the credit squeeze is having on consumers in the UK. Loans are costing more and there are fears that the cost of credit – if you can get it – is going to lead to financial hardship for many in the New Year.
A Lloyds TSB survey suggests that the average person will overspend by £147 this Christmas. Despite some gloomy predictions for Christmas, many retail analysts are forecasting a record year on the high street.
Spending £500 this festive season with a Burton, Dorothy Perkins or Wallis card will end up costing you £991.35 if you only make the minimum repayment each month. Other cards costing almost as much and charging over 28% interest are with Miss Selfridge, New Look and QVC.
A spokesman at the Competition Commission said that 25% still charged by many card companies seemed very high.
Simply raising interest rates is not the only way that credit companies are making money – other charges are going up too. Financial research group Defaqto says that the average fee charged for a balance transfer from one card to another has gone up from 1.64% in June to 2.57% now – an increase of almost 57%
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Fri, Nov 16, 2007
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