March 3, 2006

Barclaycard, the biggest credit card provider in the UK has announced that it is to raise it’s standard APR on by between one and two per cent.

This announcement comes quickly after the Bank of England has just reduced base rates for the first time in two years.

Barclaycard has just recently come under pressure as the “bad apple” among the Barclay Bank Group by having its profits reduced due to credit card bad debt. Barclaycards profits fell by 20% to £687 million.

Barclaycard say that the majority of their current credit card holders (90%) pay between 14.9% and 19.9% APR.

This is the latest in a series of events that Barclaycard are trying to claw back some of its lost profits. Recently Barclaycard announced that they would be reducing the interest free period that credit card holders receive to pay their account, if their balance is repaid every month in full. This move was criticised by many consumer action groups who claimed that Barclaycard were penalising consumers who elected not to pay interest.

Another Barclaycard change has been the tightening of credit card application acceptances. In order to reduce their exposure to bad debt Barclaycard are now being more stringent in who gets offered a credit card and is also planning to reduce the credit limit of many current credit card holders.