Another Bank Rate Cut That Doesn’t Apply To Credit Cards?
Once again we have a cut in interest rates and this one is significant in that it takes interest rates to the lowest level they have ever been in the 315 year history of the Bank Of England.
The cut of 0.5% reduces the official bank rate to just 1.5% a figure we have never seen before and one that takes us into new territory.
The cut will be welcome to mortgae holders who will now be paying less than they did at the start of the credit crunch but the banks are still being very cautious about lending to anyone and businesses and people looking for new mortgages are finding that money is still difficult to borrow.
The lowering of interest rates is intended to encourage consumers to start spending again but when you think that a large part of the consumers spending over recent years has been ramping up on their credit cards and credit cards are still charging typically around 16.9% when the bank rate was just 2% you can see how consumers have been ripped off in the past and are cautious about getting into further debt at such outrageous rates.
The average consumer doesn’t have a lot of money sitting around doing nothing. Most people live on each months money and at the moment that may only just cover the cost of living. I would definitely not encourage consumers to go out spending even more on their credit cards if they cannot comfortably afford repayments but at these ridiculous rates it is hard to see why anyone would choose to build up debts on a credit card.
We are going through a period of change and it will be difficult for many people but hopefully, when we do get through it, we will be in a new and more stable, sensible era where cash money is treated as an important item and credit cards are just a short term financial tool. Credit cards and not appropriate for long term credit and with the outrageous interest rates charged by the credit cards have made consumers into a cash cow for the credit card companies.
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