Millions of credit card users are facing the highest interest rates in over two decades, despite overall interest rate reductions. Recent research by financial experts at Moneyfacts reveals that the average annual percentage rate (APR) on credit cards has soared to a staggering 35.8%, the highest since data tracking began in June 2006.

Rachel Springall, a finance specialist at Moneyfactscompare.co.uk, highlighted the evolving landscape of credit card usage over the past 20 years. She emphasized the increased convenience and safety of credit cards but cautioned about the rising costs associated with borrowing. Springall advised borrowers to make consistent repayments to efficiently clear their debts.

This surge in credit card interest rates comes at a time when the Bank of England’s base rate stands at 3.75%, potentially facing another decrease in the upcoming month. Consequently, credit card companies are currently charging nearly ten times the Bank’s primary rate.

Despite these high rates, major UK banks like Barclays, which includes Barclaycard, reported substantial profits last year, with Barclays alone earning over £9 billion, including £3.4 billion from UK operations. Data from UK Finance also indicates a 2.6% increase in credit card spending to £21.4 billion in November 2025 compared to the previous year.

Additionally, a significant portion of credit card balances, about 47.8%, incurred interest, a slight decrease from the previous year. This trend suggests that many borrowers are utilizing interest-free offers. Springall recommended considering lengthy interest-free balance transfer cards, with TSB leading the market with a 38-month term and a 3.49% transfer fee.

Philly Ponniah, a chartered wealth manager and financial coach at Philly Financial, expressed concerns about the growing outstanding card balances and increased interest rates, labeling it a “toxic mix” that could negatively impact mortgage applications. Ponniah emphasized the importance of managing credit card debt effectively due to its implications on borrowing capacity and financial stability.

Ranald Mitchell, director at Charwin Mortgages, likened high credit card rates to a tax and cautioned against making only minimum payments. Mitchell criticized the current business model of credit card firms, stating that the high APRs disproportionately affect financially vulnerable individuals by keeping them in a cycle of debt.

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