Barclaycard’s decision to raise its credit card interest rates by two per cent has led to calls for an investigation by the Office of Fair Trading (OFT).
It has reduced the number of rates it offers from 30 to five, ranging from 14.9 per cent to 27.9 per cent. It estimates that 90 per cent of customers will pay between 14.9 per cent and 19.9 per cent interest on their credit cards.
The rise comes despite the Bank of England August base rate cut to 4.5 per cent.
Barclaycard blamed the increase on people defaulting on repayments. It recently attributed a 17 per cent fall in profits to ‘bad debts’ amounting to £504 million.
A Barclaycard spokesman said: “It is a reflection of the changing market conditions. As it gets more risky to lend we have to change our rates to reflect that.”
MPs on the Commons Treasury Select Committee have said that the increase could make Barclaycard the subject of an OFT investigation.
Committee member and Labour MP for Wallasey, Angela Eagle, told the Times: “I do not see why people should not make a reference to the OFT. Barclaycard has to justify what it is doing.”
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