£800 warning issued to anybody with NatWest, Santander, Barclays, Lloyds or HSBC credit card

A warning has been issued to anybody with a credit card – as borrowing skyrockets among UK bank account holders. The average purchase APR (annual percentage rate), including card fees, rose to the highest level on Moneyfacts’ records in September, at 31.8 per cent.

Moneyfacts’ records go back to June 2006. The average interest-free balance transfer term on credit cards fell to 543 days in September, from 553 days in June, marking the shortest period since March 2021. The typical percentage fee for transferring the balance was 2.29 per cent in September, up from 2.26 per cent in June.

The average cost of taking out a £10,000 loan over five years is the highest in more than a decade (since January 2012), at 8.4 per cent. Rachel Springall, a finance expert at Moneyfacts, said it now costs nearly £800 more in interest to take out a £10,000 loan over five years than it would have done on average in September 2022.

READ MORE HSBC issues five-year message to anybody with an account

Ms Springall said: “Consumers looking for a new credit card, perhaps for them to spread the cost of their purchases in the run-up to the festive season, would be wise to compare deals now. It’s also important they take time to check their credit score before they apply. If borrowers are struggling with their debts, it is imperative they speak to their provider and seek advice if they are worried about missing any repayments.”

As of February 2022, there were 59 million resident credit cards in circulation across the UK – 53 million of which were contactless. Over the previous decade, the number of credit card users in the UK has steadily increased. The most popular banks in the UK include Lloyds, HSBC, Santander and Barclays, as well as NatWest, RBS and a raft of building societies, including the likes of Nationwide.

StepChange, a debt advice charity, said the steep increase in living costs during the past year was behind most of the debt among its new clients, with more than one in five (21%) saying it was their primary reason for contacting the charity.

Richard Lane, the charity’s director of external affairs, said the figures were worrying. “With financial pressures across the board creating problems for an increasing number of households, there is a real danger that people will increasingly be turning to credit to meet essential spending into the new year and beyond.”