Credit Card Interest Rates at Record Peak
The Bank of England may have frozen interest rates at 0.5% but someone must have forgotten to tell the credit card companies because their rates are at an all-time record high of around 18%!
Calls for tighter regulation of credit card companies is increasing following in the wake of the recent Credit Card Bill of Rights introduced by President Obama in the US. Many of the credit card companies only have themselves to blame for this when they seek to justify increasing rates and fees at a time when practicality dictates a more moderated approach.
This view is clearly not shared by credit card companies who view increasing risk to their unsecured debt warrants an increase in the rates they are charging while at the same time, increasing default rates have met an increase in charges across the board for good paying customers as the companies seek to recoup losses on bad debts.
The situation is further complicated as introductory deals and incentives to move credit card debt around have withered in the economic environment. At the same time, the recession has led to high levels of unemployment and poor job security for many which further exasperates the problem.
Critics believe the credit card companies are simply perpetuating a vicious circle with higher rates and fees creating defaulting accounts as card holders are pushed beyond their budgets and limits. In the face of historically low Bank of England base rates they have a very serious case when credit card companies have hiked the average rate by at 2 points from 16% two years ago.
The trend underlines the need for debtors and cardholders to monitor their situation carefully and thoroughly and to take advice from an impartial and unbiased source as soon as they realise they are experiencing some problems with their cards. The sooner this is done the sooner a solution can be implemented to clear the matter up.
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