08:03 ET<\/span>
\n<\/span><\/p>\nThe average interest rate charged on a credit card has risen again, to 16.79%, says the Bank of England.<\/p>\n
That puts the average rate at its highest level since February 2002, although the Bank rate remains at its historic low of 0.5%.<\/p>\n
However, other figures from the Bank of England reveal that banks are still writing off huge losses on their credit card customers.<\/p>\n
The Bank said that \u00a35.3bn was written-off in 2010.<\/p>\n
“Write-offs probably reflect historic lending on cards,” said David Black of financial analysts Defaqto.<\/p>\n
“In recent years card companies have been much more careful about who they will lend to, in terms of affordability and over-indebtedness.”<\/p>\n
With defaults by customers running at approximately 10% of all credit card lending, card companies have used wider profit margins to offset the losses they have been racking up.<\/p>\n
In the 1990s, write-offs were at low levels, ranging from just \u00a3138m in 1995 to \u00a3490m in 1999.<\/p>\n
But as credit card spending boomed, and the nation’s personal debt rose to almost \u00a31.5 trillion, card write-offs started to rise rapidly.<\/p>\n
They reached \u00a33.2bn in 2008, \u00a34.1bn in 2009 and \u00a35.3bn last year.<\/p>\n
In January, accountancy firm PricewaterhouseCoopers predicted that interest rates on unsecured lending, such as credit cards, would rise by 2%-3% in the next three years.<\/p>\n
It said this would add \u00a31,800 a year by 2015 to a typical household’s credit card and loan costs.<\/p>\n
The UK Cards Association said: “The 2010 figures primarily relate to business that was written at the time when recessionary pressures were at their highest and pre-date the tightening of lending criteria for credit card issuers.” <\/p>\n<\/p><\/div>\n<\/p>\n
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