Alastair Douglas, CEO, TotallyMoney

May 16, 2024

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Alastair Douglas, CEO of TotallyMoney, comments on the rise in purchase card interest rates and how consumers can manage APR costs.

New TotallyMoney research on the rise of purchase card interest rates has found that over the past 10 years, the Bank of England base rate increased by 4.75 percentage points, yet the average card rate has risen by 6.9 percentage points.

Most high street lenders are now charging 18.90%-27.90% APR, with 51% of customers paying interest on more than £32bn of debt every month.

Lenders were increasing APR’s long before the Bank of England started hiking the base rate in December 2021. Average rates for some of the biggest high street lenders rose from 17.90% in 2014, to 18.30% in 2017, and 19.40% in 2019. Since then, it’s increased by an additional 3%.

Alastair Douglas, CEO of TotallyMoney, comments:

Long before the recent series of base rate hikes from the Bank of England, APR’s were slowly rising, with lenders now charging customers up to 11 percentage points more interest on their credit card borrowing than a decade ago.

Even since last summer, when the base rate was last increased, APR’s have risen by another 0.77 percentage points — and more than half of customers are now paying interest on their monthly statement.

Paying interest is not just costly, but can also cause financial distress. However, the good news is that it can be avoided with a balance transfer. If eligible, you could press pause on interest payments until August 2026, allowing you to pay off the debt quicker, cover other expenses, or save for a rainy day. The best card available currently gives you 28 interest free months, and you could save £1,353 on the average balance.

Always look for offers which give you pre-approval, and guarantee the interest rate, limit, and duration. That way you’ll know if you’ll be accepted before you apply, and that what you see is exactly what you’ll get.