Despite the bank of England lowering the base rate by 0.75% in the last six months, interest rates for credit cards have gone up. Recent figures show that credit card interest rates are now at an average of 17.12% which is extremely high compared to personal loan rates.

This is an increase of 0.56%, which may not sound like a huge amount but could add up if people fail to pay their cards off in full every month. Experts believe the interest rate hikes may be down to banks and other financial companies trying to make more money after the Office of Fair Trading capped the penalty fee to £12.

Penalty fees made a considerable amount of money for the financial institutions and as we are heading into a tougher economy climate profits are likely to reduce. Raising rates on credit cards is one way of bringing in extra cash to ensure big profits can still be made.