Consumers urged to shop around as cost of credit rises
Consumers have been urged to consider alternatives to expensive credit cards as the cost of borrowing rises sharply.
Digital lending marketplace Freedom Finance has called for consumer borrowers to shop around for the best rate after it was revealed that last month credit card rates hit their highest level since 1998.
According to the latest Bank of England credit statistics, quoted rates on credit cards reached 21.66 per cent in July – an increase of 0.23 percentage points since June and the highest rate since December 1998.
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The average rates on personal loans also ticked up, but remain much lower than credit card rates. The average quoted rate for a £10,000 personal loan hit 4.18 per cent in July, while a £5,000 personal loan came with an average rate of 8.27 per cent last month.
“In the current cost-of-living crisis and rate-rising environment, it is more important than ever that people make good financial decisions,” said David Hendry, chief marketing officer at Freedom Finance.
“With credit card rates at record highs in this millennium, it is crucial that people take all necessary steps to get the most suitable product for their circumstances.
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“There are hundreds of different credit cards out there so consumers should be shopping around and using digital marketplaces to access the best rates for a card that will suit their purposes and situation.”
Hendry also suggested that credit-seeking consumer should use open banking to help find the best deal.
“It will be a difficult year ahead for household budgets and the lending industry has a vital, positive role to play in helping people manage their money through this period,” he added.
“Consumers can then make the credit market work for them by having confidence they are getting the right credit product for the right reason on the best terms.”
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