We reveal the highest and lowest interest rates charged by credit cards. Is your plastic a champ or a chump?
If you pay off your credit card every month, you don't have to worry about the interest rate that your credit card charges.However, unless you set up a Direct Debit to pay off your monthly debt, always paying off your bill in full isn't as easy as it sounds. Indeed, millions of us slip up, pay late or miss a payment, and are punished with a fine of up to £25, plus accrued interest on top. Ouch!The problem with borrowing on credit cards, even for a short period, is that many charge sky-high rates of interest. Although the Bank of England's base rate is low by historical standards, at a mere 4.5% a year, most credit cards charge at least ten percentage points higher than this. Indeed, the average standard rate charged on purchases is over 15% a year.To demonstrate just how broad the range of interest rates is, I analysed data from the Moneyfacts database. In total, I checked the standard interest rates on purchases across 319 credit cards. Here's what I discovered:Nine bad guys (with rates over 20% APR)Note that Annual Percentage Rates (APRs) take account of both interest charged and annual fees, so four cards appear in this category because of their high annual fees. The eight are:British Airways American Express Premium Card charges an annual fee of £60 and an annual interest rate of 17.5%, producing an APR of 22.4%. For the British Airways American Express Premium Plus, the figures are £120, 15.9%, and 26% APR.Marbles Internet Tier 3 and Wanadoo marbles card Tier 4 both charge 23.9% APR.Barclaycard Initial MasterCard/Visa charges 27.9% APR.Coutts & Co Gold charges an annual fee of £90 and annual interest of 14.7%, for an APR of 28.2%.Harrods MasterCard charges 28.9% APR.Capital One Bank Classic charges 29.9% APR (the highest no-annual-fee APR).Morgan Stanley i24 card charges a whopping annual fee of £275, plus interest at 13.9% a year, for an APR of 57.8%.Eight good guys (with rates under 8.9% APR)Halifax Flat Rate Online Card charges 5.9% APR (the lowest standard APR around).Amex Blue from American Express charges annual interest of 6.9%, plus an annual fee of £15 applies if you spend less than £500 per year.Capital One Bank No Hassle Card and its Platinum equivalent both charge 6.9% APR.Egg Money card also charges 6.9% APR, as does Barclaycard Simplicity.Co-op Bank Platinum Tracker charges 8.8% APR, as does Northern Rock Base Rate Visa.Hence, the lowest standard rate (5.9% APR from the Halifax Flat Rate Online Card) is 24 percentage points lower than the highest rate (29.9% APR from Capital One Bank Classic, aimed at customers with poor credit histories). With the second charging five times as much interest as the first, that's a huge difference!The remaining 302 cards, which occupy the middle ground between the above categories, fall into the following categories:APRNumber of cardsUp to and including 10%24Between 10.1% and 15%90Between 15.1% and 20%188So, as you can see, almost three in five credit cards (188 out of 319, or 59%) charge a standard interest rate of between 15.1% and 20% APR. Ouch!Overall, the average interest rate across all 319 cards (excluding annual fees) comes to 15.3% APR. Including annual fees bumps up this average to 15.6%.So, before you reach for your plastic, remember that it's a debt card, not a credit card, and you're mostly likely paying interest in excess of 15% a year for the privilege of borrowing on your plastic. If you are paying interest on your credit card, try shifting your debts to a cracking 0% credit card today! Learn more in Your Ultimate Guide To Credit Cards.More: Check out our great range of 0% credit cards | We have personal loans from just 5.6% typical APR!