Credit card rates hit an all-time high amid runaway inflation that pushed shoppers to borrow to cover living expenses.
The average annual percentage rate – or “APR” – of fees on credit cards hit 26.6% this month, the highest since records began in 2006, according to Moneyfacts, a financial analyst.
May’s average rate represented a jump of 0.4 percentage points from February, when the average rate was 26.2%, and surpassed the previous high of 26.4% set in October 2021.
Richard Lane of StepChange, a debt charity, said more people are turning to credit cards as inflation rises.
“Even with the recent welcome announcement of government support, the cost of living squeeze is likely to push more people into credit to navigate near-term financial pinch points,” he said.
“Even before the cost of living crisis, one in three households struggled to pay bills and credit commitments, so an increase in credit card APRs, alongside their growing cost pressures, could see even more households struggling to keep their heads above water.
Jane Tully, from the Money Advice Trust, another charity, said: “Our concern is that more people will have to resort to credit to cover basic needs, such as rising energy bills and electricity tax. housing, which could accumulate problems for the future.