Credit card providers have been steadily pushing up the cost of borrowing over the past five years, while the base rate has remained at an all-time low.
The average purchase rate on credit cards has shown a steady increase over the past five years, from 16.71% in March 2009 to 18.46% at the end of January this year.
Worse still, as the advertised APRs must be offered to only 51% of successful applicants, it’s likely that many borrowers are being hit with considerably higher interest rates.
Credit card interest rates
The Bank of England base rate has remained at 0.5% over the same five year period, so savers have also had to contend with dismal interest rates.
Providers have also been hiking rates for existing customers. In our latest credit card customer satisfaction survey, a fifth of borrowers said their credit card provider had increased the APR once or more in the past two years.
0% deals get longer
Although interest rates on credit cards have continued to creep up, the maximum lengths of 0% deals for purchases and balance transfers have been increasing.
This is good news for customers as it allows them to spread the costs of purchases over a longer period without paying any interest on the balance on their card.
The market-leading 0% deal on purchases is now 18 months interest-free, compared to just 10 months in early 2009.
And over the same period the longest 0% balance transfer deal has increased from 15 months in March 2009 to 31 months. For more information check our Best rate 0% balance transfer table.
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