Credit cards becoming generous despite rising APR, says Defaqto

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www.moneynews.co.uk > Credit cards > Credit cards becoming generous despite rising APR, says Defaqto

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Credit cards becoming generous despite rising APR, says Defaqto

Independent financial analysts at Defaqto have said that a rise in annual percentage rates (APRs) on credit cards has been tempered by more generous introductory rates.

Since July 2006, the average APR on credit cards has risen by 2.6 per cent from a starting point of 15.8 per cent to 18.4 per cent this month.

However, at the same time, the average duration for zero per cent introductory balance transfer rates has increased from 7.98 month to 11 months over the same period.

Defaqto's insight analyst for banking David Black cautioned against having multiple credit cards and thereby increasing the risk of a person damaging their credit rating. "Clearly an individual would need to be disciplined to do this," he said.

However, he added that "if someone always repays their entire balance every month then it makes sense to opt for a card that gives rewards," as the majority of rewards are aimed at new customers.

Barclaycard last week launched its longest introductory rate for balance transfers, standing at 24 months with a 2.8 per cent balance transfer fee. Halifax is second with its card at 20 months and a three per cent transfer fee.

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