According to Moneyfacts.co.uk, rising bad debt levels and a cap on late-payment fees means that many lenders are raising the interest rates on credit cards, increasing the time it takes for people to repay loans.
“Rising bad debts and the lost fee revenue has left many providers with no choice but to look for alternative avenues for income,” said Lisa Taylor from the website. “For many consumers this rise may go unnoticed – but should they take the time to look at the long term consequences, they could be in for a nasty surprise.”
This summer the Office of Fair Trading made credit card providers limit how much they could charge on late-payment fees, a large source of income for lenders.
However, Ms Taylor claims that this means that with interest rates rising to recoup losses, those only repaying the minimum amount on their card each month will take much longer to clear debt.
She recommends that consumers look carefully at their next statement and take some form of debt management plan to make repayments.