Cost to borrow on the rise for credit cards

The average purchase APR reached a record high this month, according to the Moneyfacts UK Unsecured Lending Trends Treasury Report. Currently, this average APR stands at 29.6%, a rise from the 26.6% recorded in August.

The increase was mainly due to American Express, whose newly launched card charges 439.9% APR. Much of this APR is due to its £575 yearly fee. More information on this card’s perks, and other reward cards on the market, visit our Rewards Card table.  

There have also been some interest purchase rate rises over the last three months, including those from American Express, Barclaycard, HSBC, Sainsbury’s Bank and Tesco Bank, and these, coupled with other card launches, resulted in a rise to the average per annum rate to 23.967% APR.

Interest-free terms also fluctuated over the last three months, and between June and September both the 0% introductory terms for purchases and balance transfers fell slightly.

There remains a healthy number of offers that will allow borrowers to move their debts interest-free or indeed make purchases, but this area of the market saw more subdued activity last month.

In the months leading up to the festive season and the start of 2023, more competition could arise. One area that has worsened for borrowers is balance transfer fees, where the average stands at 1.99%, up from 1.95% in June. Borrowers looking to consolidate their debts would be wise to carefully compare these upfront fees and the length of any 0% offer before they commit.

To help those figure out their minimum monthly repayments, use our calculator below.