The average purchase rate on a credit card has risen to 19.1%, the highest level since May 2011. According to latest research by Moneyfacts Group, credit card rates are believed to have risen as a result of providers allowing customers to pay back less of their balance each month.

The popularity of interest-free credit card offers has also meant that providers have to sustain these offers by introducing higher rates. The average rate has leapt from 18.1% in November 2011, with cardholders holding an existing debt of £5,000 and paying just the minimum repayment of £5, facing an additional £692 over the life of the debt compared to a year ago. Commenting on the findings, Rachel Springall, finance expert at Moneyfacts Group, believes many customers are blissfully unaware that credit card rates are on the increase as the busy Christmas shopping season begins.

“If in doubt, shoppers should opt for an introductory interest-free purchase credit card, which gives them some breathing space so they can focus on repaying solely the amount they have spent,” she said. “Since last year, the majority of credit card lenders allow their customers to pay as little as 1% of the original debt each month, which means card holders will be taking longer to repay their balance and are incurring interest for a longer duration.

It is more important than ever for customers to decide whether to move their existing debt to a balance transfer credit card and aim to repay the debt before the interest-free period ends.”

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