UK credit card rates reach record in new blow to consumers

UK shoppers taking out new credit cards face record-high interest rates on their bills.

The average annual percentage rate for the products is now 30.4 per cent, according to Moneyfacts Group, which began compiling the data in June 2006. That includes fees and is up from 26 per cent a year ago.

Shoppers in Britain are putting more money on their credit cards as the highest inflation in 40 years erodes savings built up during the pandemic. They splurged on their cards before Christmas, spending £1.2 billion in November, triple the amount of the previous month.

Holiday spending has so far helped retailers surprise to the upside in earnings, with shoppers paying out more than £12 billion (S$19.4 billion) on groceries alone for the festivities.

That expenditure was driven in part by food inflation, which has contributed to a cost of living crisis that’s expected to leave families £2,100 worse off.

As well as increasing rates, credit card providers have been making their terms less attractive on average. Over the past 12 months, balance transfer fees have risen and the interest-free balance transfer term has shrunk, the Moneyfacts data show. BLOOMBERG