Credit card rate rises worth £712m

CREDIT card interest rates have reached their highest level for two years despite sharp reductions in the Bank of England base rate, research shows today.

The average interest rate charged on a credit card balance has increased by 1.1 per cent during the past two years, even though the base rate has fallen from 5.25 per cent to 0.5 per cent during the same period, according to website MoneyExpert.com.

The group estimates that the increases will have generated an extra £712.8million in annual income for credit card providers.

The biggest interest rate increase has been for cash advances, with these rising by an average of 1.7per cent to 24.99 per cent since April 2007. Customers are also paying an average of 0.9 per cent more on purchases at 17.6 per cent and 0.7per cent more on balance transfers at 16.79 per cent.