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Credit card borrowers urged to check rates

Credit card borrowers urged to check rates

Category: Credit cards

Updated: 15/02/2010
First Published: 15/02/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Credit card borrowers have been told to challenge their provider if the interest rates they are charged increase unexpectedly.

The call comes after research from Moneyfacts.co.uk revealed credit card rates have hit a 12 year high.

Increased competition between credit card providers at the end of the 1990s had seen rates start to fall.

However, having dropped to their lowest level in 2006, with credit card providers increasingly concerned over the ability of borrowers to repay their debt, particularly given the high level of unemployment in the UK, rates have since been on the rise.

As a result, the average credit card rate now stands at 18.8%, the highest level seen since 1998.

It means that credit card borrowers with a debt of £5,000 on their card, who make only the minimum repayment each month, will now repay an additional £2,289 over the life of the debt than they would have in February 2006.

"If customers receive notice of a rate increase, they should challenge their provider for the reason why the increase is necessary, especially if their credit status hasn't changed," said Michelle Slade, spokesperson for Moneyfacts.co.uk.

"Competitive deals for balance transfers and introductory purchases remain on offer, so it is definitely worth taking the time to see if you can transfer to a better credit card with another provider."

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