Barclaycard risks and rates go up

Barclaycard is writing to its 9m customers to tell them of a rise in interest charges from November. Barclaycard, Britain's biggest credit card company, says it needs to raise rates -by as much as two percentage points in some instances - because it's now more risky to lend money.

The decision has been taken even though the Bank of England's official rate fell from 4.75% to 4.5% in August, the first cut in more than two years.

A spokesman said: "We've put prices up to reflect market conditions. We don't like putting prices up.

"We recognise that interest rates have gone down, but the risk of lending has gone up."

The card company has a number of rates of interest for customers depending on a variety of factors, but after the rate rises the majority of customers will either be charged 14.9%, 17.9% or 19.9%.

But some customers could face an interest charge as high as 27.9%.

Barclaycard admitted in August that it was concerned about the ability of some customers to repay debts and took the unusual step of cutting the credit limits for 83,000 customers.

It has been turning away as many as one in two applicants for credit card and admitted its profits had fallen by 17% because of the bad debts.