Banks increase the cost of using credit cards

14/11/2008

Even though the cost of borrowing is falling, banks have still increased the cost of using credit and debit cards. This will affect millions of credit and debit card users according to data from The Independent.

The yearly percentage payable on credit cards has risen even though the base rate has been nearly halved by The Bank of England from around five per-cent to three per-cent since May this year. As a result of this, banks have been heavily critised for not passing on the cut n rates to card holders.

There is a similar picture with High Street store cards who are also increasing rates on their cards.

“When it comes to borrowing, store cards are a complete rip-off. But with other forms of credit running dry, desperate consumers may be tempted into expensive deals as a last resort for Christmas,” Said Sean Gardner, director of MoneyExpert.com.

“While the interest rate is considered when rates are set, you must also factor in the cost borne in providing the service.” A spokesperson added that the gap between the average credit card APR and the base rate “historically low levels, essentially, the credit card market is extremely competitive, commented Apacs who are the payments association who represent credit card providers.