Credit card market shrinks whilst borrowing costs rise

Recent reports have shown that over recent weeks the credit card market has been shrinking in terms of the number of credit card deals available, whilst at the same time the costs associated with borrowing on credit cards have been rising, despite the fact that the base interest rate has fallen dramatically over recent months.

With regards to the shortage of credit card deals on the market one industry official said: ‘Capital One, RBS and Mint have all recently withdrawn 0% card deals. The market is shrinking so if you want an interest-free deal, make sure you act fast. They are harder to get unless you have a perfect credit history. The market has changed beyond recognition over the past year. It is a real sign of the new era of tightened credit.’

There has been additional concern over recent months because of the high interest rates and charges that are applied to credit card borrowing, and this has become even more of an issue since the base interest rate has plummeted over the past few months, widening the gap between the base rate and credit card borrowing costs.

The issue that has arisen with regards to credit card charged and interest rates has sparked controversy lately, and even the Prime Minister, Gordon Brown, has said that he wants credit card companies to take action and treat customers more fairly rather than fleecing them with high borrowing costs.