Credit card interest rates for people with poor history can be almost 55 %

Individuals with poor credit histories are facing exorbitant credit card interest rates of nearly 55%, which can add an extra £872 to their annual payments. This situation is often due to a credit report error, missed payments, or excessive credit utilization. The average credit card holder in the UK pays interest on their balance, with the total credit card debt reaching £33 billion. While the average APR interest rate is around 24.9%, those with a blemished credit report can face rates as high as 54.9%. The cost of living crisis has led to increased credit utilization and debt, with total credit card balances growing by 7.7% in the past year. One in two adults are paying interest on their borrowing, and one in two adults could be paying almost £900 more in credit card interest annually. Alastair Douglas, CEO of TotallyMoney, emphasizes the importance of taking control of one s credit score by signing up for a free credit report service. He suggests that even small actions, such as getting on the electoral roll or fixing errors, can help improve credit scores. Douglas also highlights the flaws in the current system, where those in the worst situations are likely to pay the highest interest rates. Andrew Hagger, a personal finance expert, warns that the ongoing cost of living squeeze may lead to late or missed payments, further damaging credit records and resulting in higher interest rates for future loans or credit cards. The cost of having a poor credit record can be significant, as individuals may no longer qualify for best buy card offers and face credit card rates of 40% APR or more. TotallyMoney aims to help customers improve their credit scores and avoid high interest rates by providing a free personal finance app that puts customers in control of their financial data. The app has helped one in four people with little or no credit history build one within six months, and 60% of customers with a poor credit score have seen an increase within a year.

Source: dailystar.co.uk
Published on 2024-09-28

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