Providers are now charging an average of 20% interest on credit cards, in an attempt to make back some of the money that they lost on the introductory offers that many of them had previously been giving out.
People in the UK are finally starting to make more purchases on credit cards, since the recession forced many on to much smaller budgets. However, research now suggests that the interest rates being paid by consumers are higher now than they were in 2009.
Market analysts have warned that, although banks may be trying to earn customers with interest free incentives that last for three years, these same banks will then ramp up rates in order to earn this money back.
The average interest rate now being charged on credit cards is now 20.6% APR, this is 5.3% higher than it was in June 2009.
Experts are recommending that anyone who is on a deal like this, either pay off their debts or transfer them onto a different deal otherwise they risk being caught out by this boom in interest.
Barclaycard, Halifax and Virgin are among a few of the banks that offer interest free credit cards 3 years when a new customer transfers an outstanding balance from another bank.
Santander have a similar offer for new credit cards that lasts for 23 months.
However the banks may currently be competing to offer the longest available interest free periods, but these same banks are planning on hiking the rates to new highs once the interest free duration ends.
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