It has been revealed that Britain’s biggest credit card company is to increase the interest rates it charges to thousands of consumers, who are already struggling to make repayments.

The move has angered many, as it could cause extreme hardship to customers weighed down with crippling debts and interest repayments.

The decision appears to be a slap in the face for the demands by the Government to play fair with credit card customers and others in debt.

The tactic by the bank is apparently part of a wider policy of so-called risk - based pricing being adopted by the banks nationwide.

The industry policy means a high risk consumer borrowing £1,000-£3,000 may be charged an interest of at least 20%, while a well-off person with a good income would only have to pay 15.9%.

Thus, this means that the poor and those in debt will have to pay higher interest rates than those who are well off. There are also fears that the demand for repayments will force families and individuals to turn to loan sharks.

Currently, all banks have been putting up credit card rates in the past year, at the same time as the Bank of England slashed the base rate to just 0.5%.

Risk assessment

This new and damaging move by the bank, could force hundreds into bankruptcy, while there have been a number of worrying 'debt suicides' involving people taking their lives over credit card debt.

The reality of such a move is that Barclaycard customers are processed at ‘risk levels’. They asses those who present a greater risk during the past six months, perhaps because they have lost their job or their income has fallen, hence they will be slapped with an interest rate increase.

The group said it plans to impose a ‘limited number’ of price rises where it had clear indication that the risk of lending had increased. It stressed that customers will see their rates rise only by a ‘tiny fraction.’

However, even a small number will equate to many thousands of hard-pressed consumers, given the fact it has 11.9 million cardholders in the UK, collectively owing £10.5 billion.

Antony Jenkins, the chief executive of the bank, said: "We know some of our customers are or will be experiencing financial difficulty this year and we want to help. It is equally important that our customers have the right amount of available credit and pay the correct price on their borrowings.

"In the second half of the year, there will be a limited number of price rises where we have a clear indication that potential risks have increased but the numbers involved will be a tiny fraction of the three million customers who will see their rates reduced in 2009."

The tactic has angered consumer groups and the Government, which has previously threatened to launch an Office of Fair Trading investigation into the industry if credit card firms do not treat their customers fairly during the recession.

Money advice expert, Mick McAteer warned: "This move to risk based pricing is a direct result of the financial crisis. It means an awful lot of people, particularly those on lower incomes, will find it increasingly difficult to find credit on reasonable terms.

"It does seem unfair that those with the lowest income and highest debts will be expected to pay higher interest rates. These are the hidden victims of the financial crisis.

"Our concern is that people will be pushed into the hands of doorstep lenders."