Millions of credit card users are facing the highest interest rates in over two decades, despite general rate decreases. Research by Moneyfacts reveals that the average annual percentage rate (APR) on credit cards has surged to 35.8%, the highest since their data collection began in 2006.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, noted the significant evolution in credit card usage over the past 20 years. While credit cards offer convenience and safety, the borrowing cost has notably worsened. She emphasized the importance of fixed repayments to efficiently clear debts.
This surge in credit card rates contrasts with the Bank of England’s base rate of 3.75%. Major banks, including Barclays, have observed substantial profits, with Barclays alone generating over £9 billion in profits last year. Credit card spending reached £21.4 billion in November 2025, indicating a 2.6% increase from the previous year, according to UK Finance.
While nearly half of credit card balances accrue interest, down slightly from the previous year, many individuals are benefiting from interest-free offers. Springall highlighted the availability of extended interest-free balance transfer cards as a viable option for borrowers.
Chartered wealth manager Philly Ponniah expressed concern over rising card balances and high rates potentially impacting mortgage applications negatively. High APRs on credit cards could limit borrowing capacity or even jeopardize mortgage approvals due to lenders scrutinizing outstanding balances and payment patterns.
Ranald Mitchell, director at Charwin Mortgages, likened high credit card rates to a financial burden, cautioning against making minimum payments. He described the 35.8% APR as a financial strain on individuals with limited resources, emphasizing the detrimental impact of ongoing interest payments.
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