The average rate charged to make credit card purchases has reached its highest level in at least 20 years, according to a financial information website.
The average credit card purchase APR (annual percentage rate) in February is 35.8% – the highest rate since Moneyfactscompare.co.uk’s records started in June 2006.
For some borrowers, the high typical rate on cards on the market could mean they need to pay down their debts faster or shop around to see if they can transfer their balance onto a card which charges 0% interest for a period.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “The latest statistics from UK Finance reveal around half of credit card holders are now incurring interest charges, and while some might only owe a few hundred pounds, there will be others with significantly more debt that needs to be paid back.
“Luckily, there are some lengthy interest-free balance transfer cards to choose from, with TSB leading the market with a 38-month term, which charges a transfer fee of 3.49%.
“Reviewing card statements regularly is vital to stay on top of debts, but it’s also wise to make a calendar note of when any balances will incur interest.
“Shifting debts around is handy to grab interest-free offers, but the debt will hang overhead if only the minimum repayments are made each month.”
Ms Springall also suggested checking credit reports before applying for a new card.
She added: “Consumer behaviour continues to change, many now use their digital wallet to make payments, such as with a smart phone or watch.
“It is then essential for consumers to keep on top of their transactions, such as setting up notifications each time they spend from their bank, or checking their online statements each week.”
