Credit Card Rates 'Increase Since 2005'

The way in which credit card offers have changed with the Bank of England base rate is the subject of new research from Defaqto.

According to the financial ratings firm, repayment rates for cardholders have increased markedly since the base rate was last at five per cent three years ago: average purchase rates per month had gone from 1.23 per cent to 1.29 per cent. Balance transfer fees were also found to be on the up from 2005.

Moreover, the more stringent requirements now being demanded from lenders in the wake of the credit crunch were found to have negatively impacted on zero per cent offers for new customers. While the length of this period had extended from 9.36 months to 10.01 months over the three years, they were found to be currently offered to fewer people than before.

David Black, principal consultant of banking at Defaqto, commented: "Credit card rates generally have increased to the detriment of the consumer but it remains the case that the industry offers its best deals to new customers. For the creditworthy, there is still a clear incentive to change your credit card every year or so."

He added: "Balance transfer fees have increased relentlessly and the vast majority now have no maximum cap on the fee, whereas previously £50 or £100 was the norm. Zero per cent introductory offers remain as the mainstay of attracting new customers but the major providers are taking a much more stringent approach in deciding to whom they will offer a card and indeed the credit balance that they will offer. It's a case of them chasing quality not quantity."