Government warning to credit card companies

Sean Gardner, Director, MoneyExpert.com, said: "The credit card market seems to have been operating on a different planet as far as rates are concerned for some time now and given the recession worries it's no surprise the Government has taken this step.

"Despite a considerable drop in the Bank of England's rate over the last 12 months the average APR on cards has gone up by over half a percent; pretty galling for borrowers already paying interest way above base rate.

"With providers now increasingly pulling 0% balance transfer deals there's a real worry that the wheels could fall off for those stuck with credit card debt.

"There's obviously no legal code on what providers can charge and it's up to them to be competitive. Credit card rates have never been linked to the base rate even in the good times.

"Hopefully, though, this move will signal a more realistic approach to lending and ultimately a better deal for consumers."