With reports that credit card companies, including Barclaycard, are hiking the credit card rates of thousands of UK consumers by up to 20%, you now have 60 days to reject the APR increase.
Press reports condemned Barclaycard for putting up the APR on thousands of customers’ credit cards by as much as 20% – we explain what action you can take to beat the increase.
Your right to reject credit card rate rises
If banks want to increase the interest rates existing customers are being charged on debts, they must now give individuals 60 days to accept or reject the change.
If you do not accept the rate hike, you can choose to close the credit account and pay off what you already owe in instalments, rather than a single lump sum, at your current interest rate. However, you won’t be able to use the card for new purchases.
Which? debt and credit card expert Martyn Saville said: ‘It’s outrageous that banks think they can get away with hiking rates in this way. Base rate has been 0.5% for nearly two years now and Libor, the rate at which banks lend to each other, is still below 0.8%. It’s all very well for banks to say they’re basing their decision on a review of individuals’ accounts, but a 20% leap suggests that they’re squeezing their existing credit card customers for every last penny to subsidise new business or to boost the banks’ own profits.’
Switch to a new credit card, if you can
While rejecting increases to the interest rate on your existing card will save you money, you could save even more by switching to a new card altogether.
The irony is that Barclaycard currently has the best 0% balance transfer deal on the market. And yet, if you already hold a Barclaycard you won’t be able to switch your existing debt to the interest-free deal. Next best is the 15 months available from Virgin, MBNA and Yorkshire/Clydesdale Bank.
You can find the best deals by reading Which? credit card reviews, and work out how much you could save by using the credit card switching calculator.
However, the best deals are only available if you have a near-perfect credit file. Read our free guide Your credit report explained to find out how to boost your chances of being accepted for a new credit card.
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