Cost of credit card debt hits `13-year high`

The average interest rate charged on credit card debt has reached a 13-year high, according to Moneyfacts.co.uk.

After dropping as low as 14.8% in February 2006, the average rate has now risen all the way to 18.9%. The last time we saw it higher than this was back in February 1998, when it stood at 21.1%.

As the press release points out, rates fell towards the end of the 90s as competition rose - but when the financial troubles of recent years began, they soon began climbing again.

At today`s average rate, someone repaying just the minimum every month would pay much more than they would have back in February 2006 - if they owed £5,000 on their credit card, they`d pay a full £2,360 more by the time the debt was cleared.

"Making just the minimum payments is an expensive way to repay credit card debts anyway," a spokesperson for debt management company Gregory Pennington commented, "and we`d always advise people to repay them as quickly as they realistically can, reducing the time it takes to clear them as well as the amount of interest they`ll pay along the way.

"Even so, higher interest rates can still have a significant impact on the overall cost of debt, so it`s becoming even more important that would-be borrowers think very carefully about the overall cost of credit before they commit themselves."