The two banks that are said to have pushed up their credit card interest rates recently are Halifax and Bank of Scotland. Officials have expressed concern that whilst the Bank of England has been slashing the base interest rate over the past six months, bringing it down to an all time low of just 0.5 percent, some credit card firms have continued to hike up their interest rates dramatically.

The two groups are owned by HBOS, which has now been taken over by Lloyds TSB. The provider has said that the rate rises are between 1 and 4 percent. However, some of the credit card customers have received letters stating that their card interest rate is being increased by 5 percent. Some customers have even seen their rates increased by more than this amount. The card provider has said, however, that the move is part of a ‘continual review of rates’.

An official from HBOS said: “The changes will affect a small number of our card holders and will be according to each customer’s personal circumstances. The average increase is between 1% and 4% which is inside [government] guidelines and reflects what is happening across the credit card market.”

Despite there being three interest rate cuts to the Bank of England base rate, following an analysis carried out by the Independant, it looks like people are now paying more now than what they would have 12 months ago with interest rates now at 17.7% compared with 16.6%.

Lord Mandelson has given providers two weeks to help their customers with ways of managing their debts which was a topic discussed at a summit back in November.  By Thursday the government is expecting providers to come back to them with how they intend to go about this and failure to do so may end in further investigation by the Office of Fair Trading.

Lib Dems Treasury Spokesman Vince Cable said “The Government has got to get tough with credit card companies determined to make a quick buck out the millions of people struggling to make ends meet. Tough words are worthless unless they are backed up with real action.”

On the Conservative side, business spokesman Alan Duncan said “The Government’s policy after the banks’ bailout has clearly not reached the credit card sector. It has done nothing to clamp down on credit card ownership – particularly by the most vulnerable people.”

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Along with this another twelve cards have put up the interest on cash advances sometimes being an additional 5% interest added onto what is already an expensive way of getting cash.

11 balance transfer cards are also being changed by some providers where the transfer fee has gone up or there has been a reduction in the amount of time you have the 0% balance transfer period for.

Moneyfacts have noticed that in the last three months the average interest rate has risen from 16.8% to 17.2%.  Analyst for the group, Michelle Slade says “During the past year, card companies have continued to increase the charges on their cards and consumers will find they will be stung more severely than ever before.”

“Just like on mortgages, card companies are factoring in a much bigger margin for the risk of consumers defaulting, so rates are going up rather than down.”

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