Higher credit card rates fuelling rise in consumer debt
Higher credit card rates fuelling rise in consumer debt
Tuesday 3rd June 2008
In a study of the credit card market from Moneyfacts.co.uk, it was found that since the start of the year there have been 22 purchase rate increases 15 cash rate increases respectively.
These have come at a time when consumers are already feeling the impact of higher mortgage repayments and soaring energy and food costs.
Michelle Slade of Moneyfacts.co.uk commented: "With increasing costs on all household bills, many people are relying on their credit card to get by each month.
"But these people are going to find themselves out of pocket as purchase and cash rates, along with charges, continue to increase."
To illustrate the impact that the increases can have on credit card debt levels, Ms Slade cited the example of the Nectar Credit Card, which has seen rates raised three per cent.
She explained: "For example anyone with £5,000 of purchases on the Nectar Credit Card AMEX repaying the minimum 2.5 per cent, [with the] three per cent increase will find themselves paying an additional £1,823.75 in interest over the life of the debt."
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