Millions of credit card users are facing the highest interest rates in over two decades, despite a general decrease in interest rates. Recent data from Moneyfacts, a financial analysis firm, reveals that the average annual percentage rate (APR) on credit cards has surged to a staggering 35.8%, the highest since Moneyfacts began tracking the data in June 2006.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, highlighted the shift in credit card usage over the past 20 years, emphasizing the increased convenience and safety but also the escalating borrowing costs. She advised borrowers to make fixed repayments to expedite debt clearance.
This surge in credit card rates contrasts with the Bank of England’s base rate of 3.75%, potentially facing another reduction in the upcoming month. The disparity means that credit card companies are currently charging nearly ten times the Bank’s primary rate.
Despite the high rates, major banks like Barclays, which includes Barclaycard, reported substantial profits in the billions. Credit card spending in November 2025 amounted to £21.4 billion, marking a 2.6% rise from the previous year, according to UK Finance.
Data also indicates a slight decrease in the percentage of credit card balances incurring interest, signaling that many borrowers are capitalizing on interest-free offers. Springall noted the availability of lengthy interest-free balance transfer cards, with TSB offering a leading 38-month term at a 3.49% transfer fee.
Financial experts like Philly Ponniah and Ranald Mitchell expressed concerns about the growing outstanding card balances and record-high rates. Ponniah warned that the combination could negatively impact mortgage applications, emphasizing the importance of managing credit card debt responsibly. Mitchell described the high APR as a burden on those facing financial constraints, cautioning against making minimum payments that could prolong debt repayment and lead to financial strain.