Banks increase credit card costs

Banks have increased interest rates on credit and debit cards held by tens of millions despite the cost of borrowing falling to its lowest level for more than 50 years. The Bank of England has almost halved its base rate from 5 to 3 per cent since May, but during the same period the average annual percentage rate for credit cards has climbed from 17.2 to 17.6 per cent. More than £200 billion is owed by Britons in unsecured borrowing, including personal loans, overdrafts and credit and store cards – almost one-fifth of total lending. While the banks have been heavily criticised for failing to pass on the Bank of England’s interest rate cut to their customers, so far providers of ‘plastic’ – which include the same banks – have escaped scrutiny for failing to do likewise with their credit cards.