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Card market 'thrown into chaos' by credit crunch

Credit cards are becoming significantly more expensive for consumers in the wake of the global credit crunch, it has emerged.

Research by Moneyfacts.co.uk has revealed that a large number of UK card providers have increased their cash withdrawal rates, balance transfer fees, foreign usage charges and purchase rates in the last two months.

A survey by the financial advice website uncovered a total of 125 fee and rate increases in this short period, suggesting that the current economic climate may have made credit cards an unsuitable option for many borrowers.

Credit card analyst at Moneyfacts.co.uk Esther James said that the impact of the credit crunch on the card sector had been "quite staggering".

"With Christmas coming up, incomes will be stretched to the max with more people perhaps turning to their plastic for access to additional cash, only to get stung by still higher rates and fees," she added.

Sainsbury's Bank recently warned credit card users not to be misled by reward-based products, as many will revert to a much higher rate than advertised after the introductory period has elapsed.

A personal loan may be a better way of borrowing for many consumers.

See how much you could borrow with a Lombard Direct personal loan.

© Adfero Ltd

06/11/2007 16:54:32

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