Card providers can help ease the credit crunch

The Bank of England left interest rates unchanged today. However, one in three (29%) Fool.co.uk readers believe the Central Bank should increase the cost of borrowing.

David Kuo, Head of Personal Finance at Fool.co.uk, says: "The Bank of England has trimmed interest rates three times since December 2007. But, despite the cuts, interest charges on outstanding credit-card balances remain disgustingly high.

"The typical Annual Percentage Rate (APR) on popular credit cards is around 16%, which is over three times higher than the Bank of England base rate. Consumers carry about £64 billion of outstanding credit-card debt, of which three-quarters is interest bearing. This means we are forking out £7.7 billion in annual interest payments - around £250 for every credit-card holder a year.

"But APRs are not set in stone, and are open to negotiations. Every 1% reduction in APRs represents an extra £74 million that go into consumers' pockets to ease the credit crunch. It is a fraction of the £50 billion bailout that lenders are grabbing from the Central Bank, which is, after all, our money."

"Fool.co.uk therefore urges card holders to ask their providers for a reduction in interest rates. Banks may want their cake and eat it, but we deserve a slice too, since we are paying for it."