Card rates rising despite base rate cuts

By Jennifer Hill

LONDON (Reuters) - Average interest rates on credit cards have increased by more than half a percentage point in the past six months, despite successive base rate cuts, research shows.

The average standard annual percentage rate (APR) on credit card purchases has risen 0.56 points to 17.12 percent, according to price comparison Web site MoneyExpert.com.

The standard rate on balance transfers has risen by more: 0.83 points to 15.95 percent.

That is despite the Bank of England having cut interest rates three times from 5.75 to 5 percent during the period.

It is one of the many ways in which borrowers are being hit by the ongoing credit crunch.

Card companies have clawed back some 3.1 billion pounds worth of credit by cutting the spending limits of their customers.

Rates on mortgage have also increased, maximum loan-to-value ratios have been reduced and lenders have generally tightened their criteria.

Sean Gardner, chief executive of MoneyExpert.com, warned that a growing number of people would be forced to stick with their existing provider, rather than seek out a 0 percent introductory offer.