Card firms turn the screw as average rate hits 17.4%

The average credit card interest rate has hit 17.4% as card firms turn up the heat on borrowers in the credit crunch, according to new analysis by MoneyExpert.com.

The independent financial comparison website says average standard rates have risen by 0.6% from 16.8% since February this year despite two Bank of England rate cuts from 5.5% to 5% over the same period.

More than 72 cards now charge standard rates of 17.9 per cent or higher compared with just 59 in February, MoneyExpert.com says.

And there are now cards charge eye-watering rates of more than 40% such as the BA Amex Premium Plus at 43.5% and the Ultima from Citibank at 41.2%.

There are still low-rate cards however such as Barclaycard's Simplicity at 6.8% which has maintained its charges at the same level for the past six months. Other low-charging cards have either disappeared or raised rates.

Sean Gardner, director of MoneyExpert.com, said: "Homeowners have been the most visible losers in the credit crunch but credit card customers are also sharing the pain.

"Average rates of 16.8% were bad enough in February but despite two Bank of England rate cuts which reduced borrowing costs by 0.5% credit card average rates have increased by 0.6%.

"Mortgage customers might complain about rates of six or seven per cent but for credit card customers the charges are much higher. And with some cards charging more than 40% it really seems like the sky is the limit.

"There is however still plenty of choice in the credit card market and a lot of competition. Customers paying higher rates on debts should review their credit card as a matter of urgency and switch."

Other companies offering lower-rate cards include Capital One with the Low Rate Credit Card with Cashback at 8.5%, Intelligent Finance' Flat Rate MasterCard at 8.9% and Co-Op Bank's Platinum Fixed Rate Credit Card at 9.9%.