LONDON—While overall lending costs have plunged to record lows in the years following the financial crisis, the average credit card interest rate has steadily risen in the U.K., according to a new report.
The research group Moneyfacts says the average credit card interest rate today is 23%, compared to just 15.3% in 2006.
“Today's average is a record high. One explanation for the higher average rate, the firm suggested, was that more introductory 0% interest deals were being offered. These serve the purpose of attracting new customers, but later revert to a very high rate further down the line,” The Telegraph said in its analysis.
“While there has been a huge injection of introductory interest-free offers into the market over the last few years, which can help spread the cost of purchases, this has not stopped a surge in credit card interest away from the timed offers,” Rachel Springall, an expert at Moneyfacts, told The Telegraph.
“What’s more, further rises may occur in response to any base rate hike, as it gives lenders an excuse to pass on higher interest charges to consumers,” she said.