No link between credit card APR and Bank rate, says trade group


Credit card interest ratesThere is no link between the Bank of England base rate and the APR of credit cards, according to the UK Cards Association. The trade group made the statement in response to criticism from consumer watchdog Which?.

Which? research showed that credit card firms have put their rates up during the past year, despite the Bank of England reducing the base rate to a historic low of 0.5%. But Paul Rodford, UK Cards Association head of policy, said that Which? "erroneously [suggested] a direct link between the base rate and APR, which has never been the case".

He argued that the average APR has consistently fallen over the past 14 years, regardless of the base rate's value. "The APR is the total cost of credit and takes into account interest rates, fees and charges," Mr Rodford explained.

"It also reflects the risk of granting an open-ended line of unsecured credit and the possibility of bad debt in an increasingly uncertain economic climate."

Published: 30 April 2009