Monday, March 1, 2010
Category:
Consolidation
According to Moneyfacts.co.uk, growing competition within the credit card market at the end of the 1990s resulted in rates beginning to fall.
In 2006, credit card rates reportedly reached their lowest average level of 14.8 percent. However, as the economic downturn set in, credit card rates started to steadily rise. In fact, it has been revealed that average credit card rates now stand at 18.8 percent, which marks the highest percentage for 12 years.
Spokesperson for Moneyfacts.co.uk, Michelle Slade, said:
"The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts.
"This increased risk continues to be passed on to both new and existing credit card customers through higher rates.
"Borrowers with £5,000 debt on the card, who just repay the minimum each month, will now repay an additional £2,289 over the life of the debt than they would have in February 2006.
"Other charges such as balance transfer, cash withdrawal and foreign transfer fees also continue to go up, leaving customers paying more across the board.
"Card companies are reassessing their existing customer base, resulting in numerous customers seeing a rise in their rate.
"Many such customers who would previously have switched to another provider are now finding it's not so easy to do so.
"Competitive deals for balance transfers and introductory purchases remain on offer, but card providers are being extremely selective over exactly who they accept for these deals.
"If customers do receive notice of a rate increase, they should challenge their provider as to why the increase is necessary, especially if their credit status hasn't changed."
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Homeowners who may find multiple credit card repayments confusing, could consider tying these commitments up into one place with a secured loan. One of many finance options available, a secured loan for debt
consolidation could leave borrowers with a single monthly repayment, which could even be lower than the sum of current outgoings. Therefore, borrowers could be left with more money each month, which could potentially be set aside in a savings account for future use. However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.
