Cards jack up charges and interest
Despite the plunge in interest rates over the past six months, credit card firms continue to raise interest rates and charges across the board. Many have also reduced cardholders’ credit limit by an average of nearly £2,000.
The most common ploys by the card firms have been to raise charges for specific types of use. Charges for cash withdrawals, and interest rates on cash withdrawals, are one example. Another is the fee for usage abroad, which in many cases has risen from 2.25% to 2.75%.
Among the big card issuers that have cut credit limits are Nationwide, First Direct and Barclaycard. Over 2.7 million people have seen their limits reduced, though the card firms claim that in most cases the credit limits were higher than cardholders were actually using.
The one thing the card companies have not increased but reduced is the minimum monthly repayment. This move has been criticised by some consumer groups, but it does mean fewer people will incur penalties for not making the minimum payment. If you have a balance outstanding on which you’re paying interest, though, you should ignore the minimum payment figure and pay as much as you can each month until you’ve paid it off.
