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UK credit card interest rates hit 13-yr peak in September

UK credit card interest rates hit 13-yr peak in September

Mubasher: Average interest rates paid by UK consumers on their credit card balances hit their highest level in more than 13 years, according to figures.

In the run up to Christmas, the time where households ramp up their spending, the average annual percentage rate (APR) hit 24.7% in September, compared with 23.4% in the same month last year, personal finance data provider Moneyfacts said.

This marked the highest figure for rates on plastic since June 2006, when also the website started its records.

“During a period of economic uncertainty, it wouldn’t be unreasonable then to see credit card companies increase the interest rates charged to either existing or new customers if there is a potential for customers to default,” Moneyfacts finance expert Rachel Springall said.

Moreover, the underlying purchase rate, which excludes a card fee, hit an all-time high of nearly 22.53%, rise of some 1.536% since September 2017.

The proportion of credit card balances bearing interest reached 53.4% last June, down from 54.6% a year ago, the latest Moneyfacts figures showed.

Moreover, the annual growth of outstanding balances dropped to 3.6%, retreating from its record high of 8.3% at the beginning of last year.