Credit Card Debt Is Becoming More Expensive - Time To Reduce Debt On Credit Cards

4th July 2022

In response to rising inflation, the Bank of England -- the UK bank, which is in charge of monetary policy -- has increased rates several times since March. This has a knock on effect through nearly every part of the economy, including things like credit cards.

Credit card APRs, or interest rates, are increasing in at the same time as Bank of England increases. If you have credit cad debts then you need to get moving to reduce it as more rate increases are forecast in coming months

For anyone carrying a balance from month to month the interest charges will continue to get more expensive with each rate increase.

Royal Bank is now notifying customers of the latest increase to rates. From 29th September 2022 their increased rates will affect all card holders unless they clear the balance each month. Their rate is increasing from 17.436% to 19.956%. On £500 that will cost and extra £1.05 per month. Note - rates may vary depending on circumstances.

As more rate increases are likely it is time to review your spending patterns to reduce outstanding balances. With all the other cost of living increases that are coming such as a huge rise in the cost of gas and electricity in October time is short.

Money advice services are already saying they have seen a huge increase in demand for debt advice.

If you pay your credit card bill in full every month, you have nothing to worry about. However if you have a balance on a card, carrying it month to month will cost you more once rates increase.

During the pandemic lockdown period many people reduced or cleared credit card debt With even higher interest likely in the very near future now is the time to make plans to pay off completely or at least make a plan to reduce it as fast as you can.

Reducing this debt will make it easier to control your finances as other cost increase. Once cleared it is good idea to keep the credit card that charges the lowest rates you can find as it is very useful to pay for large items and has some safeguards built in if paying for things like holidays.

There are plenty of web sites to compare credit card rates and charges.