Credit card rates hit 13-year high

According, Credit card rates hit 13-year high. The financial advice website reports that the  rates for borrowing on plastic peaked at 21.1% in February 1998, after which increased competition resulted in falls to an eventual low of 13.8%, in February 2006.

The economic downturn has seen providers steadily increase their credit card rates, with the average rate for new customers now hitting 18.9%.

Further reports says that continued unstable economic conditions have left lenders worried about the potential for defaults.

Moneyfacts spokesperson, Michelle Slade, comments: “Borrowers with £5,000 debt on their card, who repay the minimum each month, will now repay an additional £2,360 over the life of the debt compared to February 2006.”

She warns: “This dent in their revenue stream is likely to mean customers will continue to see rates rise rather than fall.”

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