Credit card rates hit 18-month high ahead of Christmas spend

By Daniel Culpan

Average interest rates on credit cards have reached an 18-month high ahead of the multi-billion-pound Christmas spending spree, figures show.

Credit card companies are charging average interest rates of 19.1%. That's 38 times higher than the Bank of England's current 0.5% base rate. The Bank has held the base rate at this historically low level since March 2009, going some way towards easing the financial pressure on struggling families - particularly people with tracker mortgages - across the country.

However, average credit card rates for new borrowers increased from 18.1% 12 months ago to 18.8% last month - and have now hit 19.1%. This will come as unwelcome news for consumers throughout the UK who are planning to fund some of the cost of Christmas 'on plastic'.

Christmas shoppers are predicted to spend around £4.6 billion buying things online with credit cards in the coming weeks, with billions more set to be spent on the high street.

A spokesperson for All About Money commented: "If you're planning to put some of your Christmas spending on a credit card, it pays to look around and find the best deal that's available to you. Don't forget there are different kinds of credit cards out there, from low-rate cards to cards that offer rewards and cashback. So, take the time to think about what you really want from a credit card - and remember the better your credit rating, the more choice you should have."

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.