With credit card borrowing growing at its fastest pace since 2005, analysis from Freedom Finance, one of the UK’s leading digital lending marketplaces, finds that in July 2022 average rates on credit cards hit their highest level since 1998.
The analysis of the Bank of England’s quoted household interest rate figures uncovered that average credit card rates jumped 0.23 percentage points from June to hit 21.66% in July – the highest average monthly rate since December 1998 (22.19%).
The data also showed that:
- Rates for £10k personal loans also rose in July to 4.18% – a six-year high;
- Rates for a £5k personal loan also ticked up by 0.07 percentage points to 8.27% in July – a four year-high;
- Overdraft rates stalled in July but are still at all-time highs of 35.28%.
- ONS data last week found ~6 million people using more credit than usual due to the cost-of-living crisis
David Hendry, Chief Marketing Officer at Freedom Finance, said: “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. 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.
“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. 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.”