Credit card interest rates have soared to a 12-year high despite historically low Bank of England base rates, it has emerged.
The steep rates were today criticised by one of the key men in the Assembly’s Finance and Personnel Committee — and a top economist has warned more misery could be on the way.
The criticism comes after new research revealed that the average APR on plastic now stands at 18.8% – a hike of four percentage points since the low of 14.8% in February 2006.
Peter Weir, deputy chair of the Finance and Personnel Committee, said consumers are likely to react angrily to the news.
“What will annoy people is the extent to which most banks were bailed out by the taxpayer over the last couple of years and now they seem to be taking their pound of flesh from them,” Mr Weir said.
“I think some banks are trying to clear up a mess of their own making and it should act as warning to people in terms of the downside of easy credit.”
The figures, derived from personal finance website Moneyfacts, come as another report indicated the reliance placed on credit cards by UK consumers.
Indeed, a survey by price comparison firm moneysupermarket.com suggested that one in five adults have three or more cards.
The staggering figure also corroborates the results of a Belfast Telegraph investigation which revealed Northern Ireland’s credit card debt level had tipped over the £1bn mark early last year.
In February 2008, the average APR charged on cards stood at 16.8%, at a time when the base rate was set at 5.50%.
This jumped to 17.7% a year later, with providers adding a further percentage point on average rates in the following 12 months.
The current rate — the highest since February 1998 — comes at a time when the base rate is recorded at 0.50%.
Richard Ramsey, Ulster Bank senior economist, said Northern Ireland borrowers could be hit by heavy interest repayments over the coming year – a time when many are already suffering as a result of the dire economic conditions.