Debt misery - Lenders hike credit card rates

Credit card interest rates rose last month to their highest in more than three years, new figures have shown.

The findings from the Bank of England indicate that the average rate hit 16.26 per cent in December – a rise of almost half a per cent on the same month a year earlier.

This is despite the base rate falling to its lowest level on record during the period.

The news means further woe for families struggling to manage debt problems in the current economic climate.

Recent figures from Shelter revealed that more than one million people paid their rent or mortgage via credit card in the last year.

Kevin Still, director at Atlantic, cautioned that "while rates have generally risen, some leading card issuers have raised their rates hugely to over 20 per cent APR".

This, he said, will have the effect of extending the speed at which people clear debt, and cause major debt problems if minimum payment levels have to increase in 2010.

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