Consumers have been advised to be fully aware of interest rates on
credit cards that come with attractive introductory offers.
A number of banks are encouraging borrowing by advertising cards with lengthy interest-free periods, some even longer than before the recession.
However, borrowers could find themselves with hefty repayments once the introductory deal has expired, as interest rates on cards have risen to 17.3 per cent from 16.6 per cent in 2008.
Kevin Mountford, head of banking at moneysupermarket.com, said: “A key danger of borrowing this 'free money' is when you go beyond the zero per cent period. While interest-free periods may be getting longer, the sting in the tail is that the rates of interest charged once they end are also increasing.”
Recent figures have suggested that many banks are keen to increase
credit card borrowing after tight restrictions imposed on new applications during the recession.
Stewart Hosie, a member of the Commons Treasury select committee, said such deals can seem like an attractive proposition in the short term, but warned customers to be aware of the “sting in the tail”.
