Credit card holders could face 10,000% interest on one pence

Credit card holders who have one pence on the balance of their credit cards could face being charged up to 10,000 per cent interest.

US financial service providers Citibank, who own Egg the company who laid off 161,000 customers, announced it will increase the minimum interest charge for its 900,000 UK customers from 50p to £1 in May.

This means that a customer with one pence outstanding on their bill would be charged £1 – nearly 10,000 per cent interest.

Speaking to the Times, Sean Gardner of comparison firm Moneyexpert said: “Minimum interest charges are commonplace, although the details are typically hidden deep in the terms and conditions of your credit-card application.”

New figures from the Bank of England show that the average credit-card interest rate has increased to 17.67 per cent from 16.98 per cent a year ago.

Halifax, Bank of Scotland, Intelligent Finance and Egg, impose a minimum 50p charge for customers who pay interest on their bill.

Now Citigroup and Barclays charge a minimum of one pound.

Tags: scotland, May, citibank, Credit card, bill, Sean Gardner

‘Concerned’ Brits struggle with debts

Many Brits are struggling to keep their debts under control as over one in ten reveal they are “very concerned” about their financial situation.

This figure (11 per cent) has gone up from seven per cent in just three months, with around 2.7 million people saying they have sunk further into debt by over ten per cent, according to MoneyExpert.

Sean Gardner, chief executive of the company, commented: “With the festive season just around the corner, we can only predict that the number of people worried about their ability to deal with their debts is likely to increase.

“Christmas is a massively expensive time of year so you can’t help but worry that many more are likely to become increasingly concerned about how they’ll cope.”

However, he said, there are signs that people are beginning to get their borrowing levels down, with 27 per cent of Brits successfully cutting their debts over the past three months.

Mr Gardner added that consumers must, above all, work out a repayment plan and avoid burying their heads in the sand when confronted with debt.

Tags: sand, work, repayment plan, borrowing, Business Finance, Brits, situation, Sean Gardner