Interest rates hit 23.9% for credit card repayments - four tips to avoid falling into debt

Overall, total credit card debt in the UK came to £68.9billion as of November 30, 2023 which is 8.6 per cent higher than the year before.

Based on the Bank of England’s latest credit card data, the average representative credit card interest rate in the UK is 23.9 per cent which is the highest on record.

On average, adults in the UK with at least one credit card has £2,001 in credit card debt while the average household owes £2,438.

Alex King, the founder of Generation Money, is revealing four ways people can pay off or avoid falling into debt when it comes to credit cards.

Before sharing what those in debt can do, the financial expert recommended people make sure they make the minimum payment each month.

This will help card holders with avoiding late payment fees and protect their credit score from potential harm.

If someone fails to pay off their credit card in full every month but makes the minimum payment, they may not be penalised in the short term but it will take longer to pay off any outstanding debt.

However, if someone continues to use their credit card then their debt is likely to grow over time which will have a negative impact on your credit score.

Mr King cited the following ways people can pay off their credit card debt as soon as possible:

• Transfer expensive debt to a zero per cent card as there will be no added interest to pay on the amount transferred for a set period which allows you to pay off the debt faster.
• Ask your credit card company to lower interest rate or freeze interest. Lenders will be under no obligation to do this but under new FCA rules, they may consider it.
• Pay off the most expensive debt first. This will allow you to save the most in interest payments.
• Use savings to make overpayments. However, the expert noted that everyone should keep some cash savings in case of an emergency.

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According to the finance expert, credit card debt in Britain has increased by a rate of more than eight per cent which has not been “seen since the aftermath of the Financial Crisis in 2010”.

He said: “At the same time, average representative interest rates on credit cards have hit 23.9 per cent - an all-time record high.

“Taken together, we have a situation where credit card debt is rapidly growing at the same time that it’s never been more expensive.

“For the UK economy, this could mean a potential stumbling block to consumer spending and a knock-on impact on economic growth in 2024.“