The average interest rate on a credit card has reached a 12-year high, according to new research from Moneyfacts.
This month, the average credit card rate currently stands at 18.8%, according to the report, compared with 17.7% a year ago and 16.8% two years ago. The last time the rate was higher at this point in the year was in 1998, when the average rate was 21.1%.
However, in 1998 the base rate was 7.25%, compared with 0.5% today, meaning that the margin between the base rate and credit card rates has increased by 4.45% since that time.
A debt expert at Think Money commented: “The uncertainty in the economy has led credit card providers to charge comparatively higher rates than in the past. This means that credit card debt is more expensive than it has been, and as such we advise borrowers to think carefully about when and how they borrow money.
“Credit cards can cost next to nothing to use if the debt is repaid promptly, but otherwise the high interest rate can mean the debt grows very quickly.”
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