Since the start of 2010, average credit card rates have hit a 12-year high. Strange, you might be thinking, since we’ve been enjoying the bank’s emergency rate of interest being set at 0.5%. Well, that just highlights that it isn’t all rates that have been on the increase. Essential, lenders have been targeting specific groups of borrowers and raising their rates without warning. This helps to keep the increase under the radar. High risk customers, those with poor credit ratings, tend to feel the brunt of this activity as the increases are introduced as an added punishment for going over their arranged credit limit and missing or making late payments. Of course, they are already penalised and charged for these things but that doesn’t stop them being punished again.
The Office of Fair Trading has put a limit of £12 on this type of penalty, limiting the lender’s ability to recoup the full sum from the missed payments. This loss of revenue was obviously not an option for the credit card companies, who simply looked elsewhere for the money. Pushing up the interest rates for lenders who feel that they aren’t in a strong enough position to argue may not seem a particularly fair way to do this but it’s the situation we find ourselves in.
It’s not just those who are considered to be potentially risky borrowers or those with a poor credit score who are currently having higher rates applied to their credit card accounts. Even those with a first rate, unblemished credit report are being hit with the big fees.
Right, so those with a great credit score are penalised and those with a poor credit score are being penalised. So, who’s not being penalised? Those safely ensconced in the middle? Even if you miss the odd payment, nothing severe but nothing too risky, you’re still fair game for the rate hike. Each case must therefore be looked at and judged on its own merits. With that in mind, should you find your rate has been increased, phone your lender and make tell them you’re leaving unless they readjust your rate, but always make sure this can actually be a possibility first. Get debt advice from an impartial financial advisor too. They’ll be able to assist you in solving a host of debt related problems.
Ultimately, there is no better way to avoid the rising interest rates on credit cards than to not have one. Freeing yourself from the stressful burden of bad debt is a priority for a lot of people but as everyone faces different financial difficulties, the debt solution that best suits their circumstances will differ too. For a free advice about how to deal with your credit debt, drop by www.harringtonbrooks.co.uk who can help find you the debt solution to your circumstances.