The exploitation of cardholders?

Last week, Moneyfacts.co.uk highlighted the extent to which credit card rates have been increasing in the UK, despite the Bank of England having lowered the costs of borrowing. Consumers may have been shocked to discover that credit cards have become even more expensive, although many may not have been surprised at all.

Responding to the findings, consumer campaign group Which? noted that some people have little choice but to pay the higher rates. Senior researcher Martyn Saville explained that loans are difficult to come by and credit card companies are aware of this.

He said that it has led to the exploitation of consumers, with banks that are unable to make money from current accounts and other means considering the cardholder to be an "easy target".

Mr Saville argued that there can be "no justification" for the average rate of 18.1 per cent identified by Moneyfacts.co.uk - as this is nearly 40 times the base rate (which was held at 0.5 per cent last week).

"I think [lenders] are exploiting existing customers and they are exploiting them because they know that there aren't as many options in terms of other places to borrow at the moment, because the credit market is quite tight," he remarked.

The expert also observed that the actual cost to consumers could be increasing by a greater degree than the headline rates, something that may make it all the more important for individual borrowers to find the best credit card deals.

Some may say that avoiding credit cards altogether is a better option, but the role that these forms of finance can play has been emphasised by Apacs, the UK payments association.

Addy Frederick, a spokesperson for the body, suggested that those travelling abroad in particular will find that they are "probably one of the safest ways to pay".

She explained that in addition to the fact that someone who is a victim of theft is much less likely to lose out if their card is stolen than cash, an extra level of protection is offered.

"If you pay for anything over £100 and under £30,000 and it's faulty or you don't get it, you can claim back for it under Section 75 of the Consumer Credit Act," Ms Frederick stated.

And with the UK Cards Association and Abta, the travel association, having found that plastic cards accounted for nearly £30 billion worth of spending while overseas last year, the importance of carrying out a credit card comparison may be clearer than ever.