Credit card providers have come under fire from consumer groups after new research revealed that the average interest rate on a credit card in the UK has hit a four year high.  This is despite the Bank of England base rate remaining at its record low level for over two years.

Even though the Base rate has been at 0.5 per cent since March 2009, new research found that the average credit card rate is now almost forty times higher, at 18.7 per cent.

Gap between Base rate and credit card rates is widening

Credit card companies have been accused of ripping off consumers by raising rates even though the Base rate has remained the same.  The Daily Mirror reports that ‘the gap between the two is gradually widening despite card providers’ costs plunging.  In 2007, base rate stood at 5.75 per cent and the average card rate was 16.6 per cent’.

Eddy Weatherill, of the Independent Banking Advisory Service, said: “It is profiteering and always has been. They are trying to boost their profits for as long as possible and we’re all being made to pay for it.  It’s heads they win, tails we lose. There is no justification for it.”

The figures from Defaqto also found that the cost of bank overdrafts has risen since 2007.  The average rate is now 14.8 per cent, compared to 13.1 per cent in 2007.

David Black of Defaqto said: “Credit cards have become much harder for people to obtain over the last few years and, at the same time, we have seen a significant increase in standard interest rates that they charge.”

A spokesman for the British Bankers Association said: “Banks continue to compete for customers and a wide range of deals are available. And customers with credit cards can benefit from up to 56 days free credit if they repay the balance in full by the stated date.”