It has been revealed that the average credit card purchase interest rate has risen from 16.3% to 18.1% over the last two years. This is in spite of the fact the Bank of England has held UK base rates at 0.5% for some time. In what many believe is a blatant abuse of power, credit card companies claim they need to increase rates in order to retain their profit margins as bad debts continue to rise in the industry.

However, in many ways this is a self fulfilling prophecy because as they increase rates to protect their profit margins this places more and more pressure on UK credit card holders. As a consequence, many credit card customers are now struggling to repay their interest never mind the capital and falling further and further into debt. We will see an explosion in IVAs, bankruptcies and Trust Deeds over the next couple of years as overspending by the UK consumer finally catches up with many across the country.

While the UK government has been fairly vocal in its criticism of the UK’s mortgage providers there has been little action in real terms against credit card companies operating in the UK.

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