Has the interest rate gone up on your credit card? We've done the math for various scenarios to see what a rate rise means for your credit card debt and how much extra interest you'll pay.

ClearScore is a credit broker, not a lender.

Impact of Interest Rate Rise on Credit Card Payments

Those struggling to pay their credit card debt are particularly vulnerable to interest rate rises, and credit cards are usually quick to raise interest rates in line with the Bank of England. How will a future increase affect your finances?

From here, if rates rise another 0.25%, the impact would be the following additional interest charges (assuming the cardholder makes only a minimum payment of 2.5% each month, and no more):

Those who pay back their full balance on time each month won't be affected by an interest rate rise.

If a cardholder has a £1,000 credit card balance on a card charging the current market average of 24.7% APR, the cost of carrying that debt is significantly higher than in previous years. Following 14 consecutive Bank of England base rate hikes between 2021 and 2023, credit card interest rates have surged; a typical borrower now pays hundreds of pounds more in interest annually than they did when rates were at their 2018 baseline of ~18%.

What Happens if Rates Continue to Rise?

The interest rate landscape has shifted significantly. While the Bank of England Base Rate peaked at 5.25% in 2023/2024 and has since begun to fall - reaching 3.75% in December 2025 - credit card APRs have not followed suit. In fact, despite the recent base rate cuts, the average credit card APR remains at a 30-year high of 24.66%. This means that even as general inflation and mortgage pressures ease, credit card debt remains historically expensive to maintain.

These figures assume cardholder makes only a minimum payment of 2.5% each month, and no more.

Next Steps

Credit card debt is generally expensive, especially if you're on a credit builder card. These products carry higher-than-average interest rates to offset lender risk, with APRs for credit builder cards now sitting at roughly 36%. With some specialist cards charging even more, many people find it useful to improve their credit score and move their debt to a more affordable product.

If you are carrying credit card balances from month to month, there are a range of approaches some people consider to manage the cost of that debt:

• Balance transfer cards: some credit cards offer a 0% interest period on balances transferred from other cards, which can allow borrowers to pay down the principal without accruing further interest during that period. The length of 0% deals and the fees involved vary between providers and depend on individual eligibility.

• Reducing non-essential spending: freeing up income by temporarily cutting discretionary expenditure is one way to accelerate debt repayment without taking on additional credit.

• Personal loans: some people consolidate credit card debt into a personal loan, which may offer a lower interest rate depending on individual credit profile and the loan terms available. This involves taking on a new credit agreement and the total cost will depend on factors like the rate offered, the loan term, and whether any fees apply.

Always make sure you can afford repayments.

FAQs

Why did my credit card interest rate go up?

When the Bank of England raises the base rate (the Bank of England's official borrowing rate), credit companies typically follow suit so your interest rate may go up.

How to get my credit card interest rate lowered?

Some credit cards will lower the interest rate on your credit card if you manage your account well over time by always paying at least the minimum amount due on time and never exceeding the credit limit. You can always ask your credit card issuer if they will lower your rate. Alternatively, you can look for a new credit card with a lower APR, but there's no guarantee you'll get the advertised APR since only 51% of cardholders will get this rate.

What does interest rate mean for credit cards?

The interest rate on a credit card is basically the amount you'll be charged on balances that you don't pay back each month. It's payment to the credit card company for lending you the money.