Credit Card Rates Rocket!

In the last three months, dozens of credit cards have increased their interest rates. Is yours in our Hall of Shame?

Bad news for borrowers: interest rates are going up -- and that's official.

As you're probably aware, the Bank of England raised its base rate from 4.50% a year to 4.75% a year last month. Since variable-rate mortgages are linked to the Bank's base rate, millions of homeowners have seen their monthly mortgage repayments rise over the last six weeks or so. Perhaps now would be a good time to remortgage, before rates rise again?

However, rates for credit cards don't normally move when the base rate changes, as credit-card companies prefer to keep them as high and stable as possible! Then again, according to new research from independent financial researcher Moneyfacts, credit-card interest rates have risen steeply in the last three months.

Credit-card issuers have hiked their rates in order to make up for rising bad debts and reduced revenues from fining borrowers who exceed their credit limits or miss or delay their monthly repayments. Earlier this year, the Office of Fair Trading rules that these penalties were excessive and suggested that card issuers reduce them to a maximum of £12.

Hence, in a predictable knee-jerk reaction, the banks have struck back by raising their lending rates. In total, nineteen different card providers have increased the standard interest rate charged on purchases on 25 different cards. Furthermore, since July, 26 cards have increased the rates charged on cash withdrawals, which are already sky high. (Stick to withdrawing cash using your debit card, because getting cash from a credit card is always a bad idea!)

Here's a list of the higher rates, courtesy of Moneyfacts:

Recent changes to standard interest rates for purchases

Card issuer	Card name	Date of change	Rate increase (% APR)	New rate (% APR)
American Express	Platinum Amex	10 July	6%	14.9%
Capital One	Classic Visa	16 August	5%	34.9%
Citi	Platinum	4 September	1%	16.9%
Co-operative Bank	Platinum Tracker	4 August	0.3%	9.1%
Co-operative Bank	Gold Base Rate Visa	4 August	0.3%	9.2%
Egg	Visa	8 September	1%	16.9%
Egg	Egg Money MasterCard	8 September	1%	7.9%
Halifax	Balance Transfer MC/Visa	9 July	5.4%	15.9%
Halifax	Platinum Balance Transfer	9 July	5.4%	15.9%
HSBC	Bank MasterCard	1 August	1%	15.9%
Lloyds TSB	Gold MC/Visa	10 July	2%	17.9%
Lloyds TSB	Rewards Amex Tier 2	10 July	2%	17.9%
Lloyds TSB	Rewards Amex	10 July	1%	15.9%
Lloyds TSB	Platinum MC/Visa	10 July	1%	15.9%
Morgan Stanley	Buy and Fly! MasterCard	6 September	1%	16.9%
Nationwide BS	Classic Visa	1 August	1%	15.9%
Nationwide BS	Classic Visa	24 October	2%	17.9%
Nationwide BS	Gold Visa	1 August	1%	15.9%
Nationwide BS	Comic Relief Visa	1 August	1%	17.9%
NatWest	Airmiles MasterCard	1 September	2%	17.9%
Northern Rock	Base Rate Visa	8 August	0.3%	9.1%
Smile	Classic Visa	21 August	3.1%	16.9%
Smile	Current Account Customer Classic Visa	21 August	3%	13.9%
Smile	Gold Visa	21 August	1.1%	14.9%
Yorkshire BS	Base Rate Visa	4 August	0.2%	10.7%

As you can see, the rate hikes vary from a modest 0.2% APR at Yorkshire BS to a whopping 6% APR for Platinum Amex credit-card holders. Overall, the average rate hike across all of the 25 cards listed above is 1.924% APR.

Recent changes to standard interest rates for cash withdrawals

*Card issuer*	*Card name*	*Date of change*	*Rate increase* *(% APR)*	*New rate* *(% APR)*
Barclaycard	Simplicity Platinum	1 August	12.1%	27.9%
Capital One	Classic Visa	16 August	5%	34.94%
Capital One	Platinum	11 September	4%	25.94%
Citi	Platinum	4 September	4.92%	28.01%
Co-operative Bank	Platinum Tracker	4 August	0.28%	9.11%
Co-operative Bank	Gold Base Rate Visa	4 August	6.71%	11.3%
Egg	Visa	8 September	2%	22.9%
Egg	Egg Money MasterCard	8 September	1%	7.9%
First Direct	Gold Card Visa	1 August	2.5%	21.9%
First Direct	Classic Visa	1 August	1.2%	24.7%
First Direct	Credit Card Visa	1 August	2.5%	21.9%
HSBC	Bank MasterCard	1 August	3.5%	21.9%
HSBC	Morrisons Visa	1 August	1.09%	23.6%
MINT	MasterCard/Visa	1 September	5.51%	24.94%
MINT	Gold MasterCard/Visa	1 September	5.51%	24.94%
MINT	Platinum MasterCard	1 September	5.51%	24.94%
Nationwide BS	Classic Visa	24 October	3%	21.9%
Northern Rock	Base Rate Visa	8 August	0.3%	9.1%
Smile	Classic Visa	21 August	3.7%	19.9%
Smile	Current Account Customer Classic Visa	21 August	4.7%	16.9%
Smile	Gold Visa	21 August	1.7%	17.9%
Smile	Current Account Customer Gold Visa	21 August	0.7%	12.9%
Ulster Bank (NI)	MasterCard/Visa	1 September	0.64%	22.34%
Ulster Bank (NI)	Gold MasterCard/Visa	1 September	0.59%	19.29%
Virgin Money	MasterCard	1 July	4%	24.9%
Yorkshire BS	Base Rate Visa	4 August	0.2%	10.7%

Again, there is a huge difference in the size of these rate hikes, which range from 0.2% APR at Yorkshire BS to an incredible 12.1% APR at Barclaycard. Overall, the average increase is 3.186% APR, which is far in excess of the Bank of England's base-rate hike of 0.25% a year. Ouch!

Naturally, this is bad news for credit-card customers who don't pay off their bills in full every month, especially those who pay only their minimum monthly repayments. Rather than put up with these rate hikes, my advice would be to transfer your debts to a 0% credit card and enjoy interest-free credit for up to a year. You have nothing to lose but your rip-off rates!

More: Use the Fool to find table-topping credit cards, mortgages and personal loans!