The cost of borrowing money on a credit card has hit a 16-year high, according to Moneyfacts.
This month, the average purchase interest rate on a credit card reached 30.3 per cent, the highest level since the analyst’s records began in June 2006.
APR is the interest rate that is charged to credit card holders if they do not pay back their balance in full each month and includes card fees.
Borrowing costs: The average purchase interest rate on a credit card has reached 30.3% – the highest level since the analyst Moneyfact’s records began in June 2006
Moneyfacts says the increase is due to interest rate rises, the withdrawal of low-rate cards and the launch of new cards.
The period for which you can use a 0 per cent credit card before interest is charged has also decreased in the past year from an average of 303 days to 266.
However, there are more credit cards offering an interest-free period than there were this time last year, up from 62 to 67.
Andrew Hagger, personal finance expert at MoneyComms, says: ‘If you do not pay off your balance in full, the amount of interest you pay on your card will increase.
‘Unfortunately, this is another cost to bear alongside higher energy and food bills.’
