Credit card and loan rates near 20-year high
Borrowers face increased rates
People turning to credit cards and loans to cope with the cost of living crisis are being hit by higher interest rates. The average credit card rates hit 21.43% in June, with this an 0.87 percentage point rise on a year ago when the average credit card rate was 20.56%.
Analysis by Freedom Finance shows the rate is approaching levels not seen since 1998, with this the last time that average rates surpassed 21.5%.
Data on personal borrowing shows that the average rate of a £10,000 loan is an interest rate of 4.11%, compared to 3.43% a year ago. For someone taking out a £5,000 personal loan, typical rates have risen from 7.84% to 8.2%.
David Hendry, chief marketing officer at Freedom Finance, said: “The latest consumer credit data paints a gloomy picture with the cost of borrowing continuing to increase as inflation spikes and the Bank continues to hike interest rates.” Ponting to record overdraft rates and climbing credit card and personal loan rates, he warned: “It all adds up to a painful situation for household incomes and budgets.”
