The Bank of England has issued a stark warning about the country’s soaring consumer debt, saying that British high street banks risk losing as much as £30bn from defaults on credit cards and personal loan credit were the economy to take a turn for the worst.
If interest rates and unemployment rates start rising sharply, lenders will struggle to deal with the losses incurred from customers being unable to pay back debt because of higher interest rates or because they’ve lost their jobs.
Some lenders have already started to increase interest rates on their credit cards. This month, John Lewis and Waitrose announced that customers of its “Partnership Card” would face higher interest rates and balance transfer fees from October. Currently customers pay 16.9pc interest on purchases and balance transfer, but from October 21 the rate is increasing to 18.9pc.
The Bank of England said that Britain’s banks will need to set aside an extra £10bn to cover possible losses on personal loans, credit cards and car loans.
For now, we’ve rounded up the best credit card deals currently on the market, from balance transfer deals and 0pc purchase cards, to reward credit cards and the best plastic for overseas spending.