Credit Card Interest Rates Reach Record Highs
Credit card rates have been increasing since the economic downturn, with the average rate currently standing at a 13 year high, new figures show.
Moneyfacts’ research revealed the average rate for new credit card customers today is 18.9 percent following a steady rise since 2006.
Borrowers who repay the minimum each month towards £5,000 worth of debt, will now pay an additional £2,360 in interest compared to this time five years ago.
“The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts,” said Michelle Slade, Moneyfacts’ spokesperson.
“Customers who would previously have switched to another provider are now finding it’s not so easy to do so.”
Recent figures from Moneysupermarket also showed that almost 4.5 million Brits were refused credit in the last year, due to the cautious nature of lenders following the credit crunch.
Compare Prepaid Credit Cards for Bad Credit History
If you have a large debt on your credit card and are being refused a balance transfer, or have been refused a credit card altogether due to a bad credit rating, investigate prepaid credit cards.
A prepaid credit card can help you budget so you have enough money left at the end of the month to repay more than the minimum on your credit card debt. This will help reduce the overall amount you will have to repay.
A prepaid credit card does not have an overdraft facility as the user can only spend the amount they loaded onto the card.
This means even those who have a bad credit history and have been refused credit elsewhere will qualify for a prepaid card – as there is no chance of getting into debt.
If you repay your debts as quickly as you can, you then have the opportunity to start saving for the future, which is vital in the current economic climate.