Credit Card interest rates hit 13 year-high

Credit Cards

Credit Cards

Credit Card interest rates have reached a 13-year high as more and more lenders have increased their interest rates since the beginning of the year.

18 credit card providers put their rates up in the first four months of this year, up from just 4 providers during the same period this year.

Lloyds introduced the biggest increases, putting rates up by 2%, whilst all the other providers put rates up by 1%.

The moves from part government owned Lloyds, and the other providers have pushed the average interest rates up 0.4% in the year, from 18.7%, to 19.4%.

With rates already at their highest point since February 1998, analysts expect them to keep on increasing, especially as new rules have affected the way credit card companies make money.

Up until the beginning of this year, credit card providers would pay off the least expensive debts when people made repayments, but new rules make them pay off the most expensive debts, decreasing their profits from credit cards.

With a £4.5billion bill for mis-selling PPI (Payment Protection Insurance) on it’s way, credit card companies are having to hike rates to continue making money.

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