Cost of borrowing on credit cards has increased

The cost of purchasing items on credit cards has increased substantially over the last four years despite the Bank of England base rate remaining at 0.5 per cent for 27 months.

Recent research by independent analyst firm Defaqto has found that the average APR on a credit card is now 18.7 per cent, which has increased from 16.6 per cent since July 2007.

David Black, insight analyst for banking at the firm, said: "Credit cards have become much harder for people to obtain over the course of the last few years and, at the same time,we have seen a significant increase in the standard interest rates that they charge."

Providers have become more prudent in terms of who they give credit cards to and who they do not, which means consumers can be charged different rates of interest on their borrowing depending on their credit rating, he added.

Consumers, in particular those with an excellent credit rating, have been urged to shop around for the best credit cards on the market as they will have a better chance of being approved than those with a poor credit record.

They may be able to take advantage of introductory offers on credit cards, such as zero per cent interest on all purchases for three months, and then swap to another card before the interest kicks in.

Brits looking for a good deal on credit cards may want to use a price comparison site such as MoneyExpert.com to do so.

The price comparison site currently recommends the Tesco Clubcard Credit Card, as it is considered to be one of the best on the market.

This card offers zero per cent on balance transfers for nine months and zero per cent on all purchases for 15 months.

It also doubles up as a Clubcard, meaning holders can gain rewards for spending on plastic.

For every £4 spent on the card, holders will earn one Clubcard point, which can then be exchanged for discounts or days out at popular attractions in the UK.
 

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