Average rates on consumer credit products registered notable increases through June amid fears surrounding inflation, reaching their highest level in 28 years, according to findings from Freedom Finance.

The firm’s analysis of Bank of England data has indicated that average quoted credit card rates increased in June, from 22.76% to 23.10%, a significant monthly rise which takes rates to their highest level since December 1995.

This rise in the cost of credit cards was mirrored in the personal loan sector, although these rates remain far below that of credit cards. Freedom Finance reported that for £10,000 personal loans, rates increased from 5.85% to 6.02% through June – surpassing the 6.01% seen as at December 2022 – and marking the highest average rate in a decade, since October 2013.

For £5,000 personal loans, rates recorded a smaller rise and creeped up from 10.15% to 10.18% in June, to return to similar levels last seen in December 2022 (10.19%).

“After a period of calm, it appears consumer credit rates are now once again on an upward trajectory with credit cards reaching their highest levels in nearly 30 years,” commented chief growth officer at Freedom Finance, Andrew Fisher.

“While personal loan rates have ticked up slightly, they still offer borrowers the ability to access the credit market at more attractive rates. It could lead to increasing demand for personal loans as borrowers hunt for products to support their financial situation amid squeezed household budgets.

“It emphasises the need for consumers to exercise best practice when looking for lending products – even in a rate-rising environment there are likely to be products that suit people’s individual circumstances and needs.”

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