Shoppers who put Christmas purchases on their credit card and fail to pay off their balance next month will be stung by the highest interest rates since analyst records began in June 2006.
The cost of credit card borrowing has hit a 17-year high, says data scrutineer Moneyfacts Compare.
The average purchase interest rate (APR) on a credit card climbed to 34.6 per cent between September and December.
The rate has jumped 4.3 percentage points in a year.
This is in part due to the Bank of England’s base rate increases during the first half of the year, but also because of less competition in the market, enabling providers to charge more and hike fees, says Moneyfacts Compare.
The average purchase interest rate on a credit card climbed to 34.6 per cent between September and December
Borrowers who want to take out an unsecured personal loan now also face paying the highest rate in more than ten years.
The APR on a £5,000 unsecured personal loan soared to 11 per cent in December, up from 6.9 per cent two years ago.
A borrower taking out this loan now will pay more than £300 more in interest over a three-year term.
Rachel Springall, of Moneyfacts Compare, says: ‘Interest rate rises should encourage borrowers to compare and switch to a better deal. They should also take the opportunity to check their credit score and fix any errors.’
