Credit card interest rates hit a 24-year high - avoid high costs with zero interest and balance transfer cards

The average credit card interest rate is now just over 22% - we explain how you could bring this down to zero by shopping around for the best card for you

Pile of credit cards spread out in a fan shape
(Image credit: Getty images)

Credit card holders face a record high in cost, with the average interest rate now 22.03%, the highest since 1998.

Broker Freedom Finance has released new data on the cost of credit cards: interest on a typical credit card rose 0.20 percentage points in November to 22.03%. It means someone borrowing £1,000 on a typical credit card would pay £220.30 in interest.

The figures come a week after the Bank of England hiked the base rate to 3.5% - the highest level since 2008 - which is further bad news for credit card borrowers: it indicates credit card repayment rates are set to keep rising alongside the base rate.

A credit card can be a useful but expensive form of borrowing. There are currently 64 credit cards on the market, with rates ranging from 10.9% to 70.1%. American Express offers an even more expensive card that charges 448% APR (opens in new tab).

Credit card borrowing has hit record highs this year as the cost of living crisis has forced people to be more reliant on them. Figures from the Bank of England (opens in new tab) however show a drop in September with consumers borrowing £0.1bn on credit cards, down from the £0.7bn in August.

We explain how you can limit credit card costs and even bring costs down to zero with the right card.

How to get a better credit card deal

Some credit cards charge no interest at all for a limited period. There remains plenty of 0% credit cards on the market. You can see our best 0% credit cards for more information.

Top of the table is Barclaycard’s Platinum card (opens in new tab). This credit card offers 0% for 25 months on purchases, with this rate jumping to 25.9% after that point. Our eligibility calculator (opens in new tab) via our sister site Gocompare, will indicate whether you could get the full 25 months or if it is more likely you could get just 12 months at 0%.

Meanwhile, switching to a 0% balance transfer credit card allows you to transfer debt from an old credit card to a new one, where you can pay off your debt with no interest charged for a certain time period. You can see our best 0% balance transfer cards for more information.

Top of the table is Sainsbury’s Bank Credit Card (opens in new tab). This credit card offers 0% for up to 34 months but be aware if your credit score isn't great you could be offered less time to pay off the balance before you're charged interest, which is set at 21.95% APR. Our eligibility calculator (opens in new tab) via our sister site Go.Compare, will indicate whether you could get the full 34 months or if it is more likely you could get a shorter period of time at 0%.

It goes without saying that you should ask yourself if you actually need to borrow before applying for a new credit card.

If you’re struggling it’s worth checking if you are eligible for any government help, state benefits or energy firms’ hardship funds first. If you’re struggling with debt you should speak to a debt charity that can offer free guidance such as the National Debtline (opens in new tab) or StepChange (opens in new tab)

Katie Binns

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.