Credit card companies are hiking up their interest rates after the government forced them to cut to cut other charges.
Earlier this year, the told credit card companies to slash their penalty charges – such as the charge for paying your bill late – to £12 or less.
Previously credit card companies were hitting customers with penalties of between £20 and £25 and the OFT estimated they’d been raking in £300 million a year.
The Bank of England base rate recently increased by 0.25 per cent but many card companies have increased their interest rates by significantly more.
For example, Egg Money’s interest rate has leapt from 6.9 to 7.9 per cent, while Capital One’s has shot up from 29.9 to 34.9 per cent.
Customers taking out a Smile credit card now pay 16.9 per cent interest – up by more than 3 per cent – while the interest rate for Amex Blue has almost doubled to 12.9 per cent.
Which? Principal Researcher Mike Naylor said: ‘It would seem that this is a cynical attempt by the banks to recover lost money after they were forced to cut charges.
‘We question whether £12 is the figure in every case for every credit card company and are calling on the companies to charge their customers what it actually costs them to deal with these late payments and so on. Almost all companies now charge £12 for late payments and for being over your limit – it simply cannot cost them all the same amount.’