Brits hit with double whammy as credit card costs and loan rates are highest in years
The cost of credit card borrowing has reached its highest level in at least 17 years while Britons also face decade-high personal loan rates.
Data from financial information site Moneyfacts showed the average credit card purchase APR (annual percentage rate) rose to a record 34.6 per cent between the start of September and the start of December 2023.
Moneyfacts’ records go back to June 2006.
It attributed the surge to card withdrawals, interest rate hikes, fee rises and high fees on new cards launched.
The average cost of taking out a £5,000 personal loan over three years is the highest in more than a decade at 11 per cent.
Rates for £7,500 over five years and £10,000 over five years are also up from September.
Borrowers also face shorter periods before being charged interest.
The average interest-free balance transfer term on credit cards fell to 508 days in December from 543 in September, the lowest level since April 2015.
The typical percentage fee for transferring the balance rose to 2.38 per cent in December from 2.29 per cent in September. This figure is up 2.16 per cent year-on-year and the highest since June 2020.
Rachel Springall, a finance expert at Moneyfacts, noted that the number of offers for borrowers to spread the cost of their purchases or to move their existing credit card debt to an interest-free balance transfer deal have dwindled.
“As a new year approaches it’s wise for borrowers to take some time to review their debts and any interest that is being incurred. Consumers looking to apply for a new deal should also check their credit score and fix any errors,” she added.
“Those borrowers who are struggling with their debts should speak to their provider immediately and seek debt advice if they are worried about missing any repayments.”