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May 20, 2011

Credit Card Rates Fly High In First Half Of 2011

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Credit card rates have risen during the first months of this year and increases of up to two per cent have been discovered by research from comparison site The organisation revealed that since the start of 2011, 18 credit cards have had rate increases – a big difference from the four registered as rising in the same period during 2010.

What’s more, many of the more recognisable stars of the high street have been part of this movement; Barclaycard, Santander, Halifax and Royal Bank of Scotland have all gone this route with their offerings and more of the same has been shortlisted by the study. The raft of increases means that the average interest rate now stands at 19.1 per cent – the highest level registered in the last 13 years.

However, the shift is not without its reasons, it seems. was quick to stress how card providers were forced to change to a new system, where repayments pay off the most expensive debts first and effectively curb their revenue. Additionally, a Payment Protection Insurance ruling could force providers to pay back billions to compensate people who were mis-sold such policies.

“It is unlikely we have seen the last of the increases and Moneyfacts expects more providers to follow suit,” said leading analyst Michelle Slade. “Providers hope to bank on customers’ reluctance to keep switching and can claw back the lost interest during intro periods once they end. In an ideal world, customers should look to repay their balance in full each month; that way no interest is payable.”

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