Credit Cards UK: Rates, Card Types and Your Rights

What UK card borrowing costs now

In August 2026 the effective interest rate on interest-charging credit card balances was 21.55%, up from 21.45% in July, according to Bank of England Money and Credit published on 29 September 2026. That is the rate borrowers actually pay on balances that accrue interest, not a headline advertised rate. For comparison, the effective rate on new personal loans was 9.96% and on interest-charging overdrafts 20.27%. Card borrowing therefore sits above personal loans and slightly above overdrafts on this measure.

The gap matters because card balances are typically revolving. A balance left unpaid moves to the card's standard rate when any 0% period ends, and that standard rate can be much higher than the 21.55% average. The FCA found customers in persistent debt paid on average around £2.50 in interest and charges for every £1 repaid. That figure shows how quickly minimum payments can be absorbed by interest rather than reducing the balance.

Card borrowing is growing fast

Net credit card borrowing was £1.2bn in August 2026, and credit card borrowing grew 13.3% over the year. That 13.3% annual growth is the key number for anyone deciding whether to take on or clear card debt now. Growth of that pace means more households are carrying balances at a time when the effective rate on interest-charging balances is 21.55%.

The same Bank of England release puts the effective rate on new personal loans at 9.96%. A borrower consolidating card debt at 21.55% into a personal loan at 9.96% would face a lower rate, but the loan is a fixed commitment with its own term. The 13.3% growth figure does not tell you which choice is right for any individual; it tells you that card balances are expanding across the UK, so the terms attached to those balances affect more people each year.

The main card types and what each is for

A balance transfer card moves an existing card balance to a new card, usually with a 0% period. MoneyHelper states balance transfer fees are often around 2% to 4% of the amount transferred. When the 0% period ends the balance moves to the card's standard rate, which can be much higher. A money transfer card lets you move part of the credit limit into your bank account as cash. Money transfer fees are often up to 4% of the amount transferred, and transfers are usually capped at around 90% of the credit limit.

A 0% purchase card charges no interest on new purchases for a set period, after which the standard rate applies. A rewards card pays cashback, points or other benefits, but any balance carried past the due date still attracts interest at the standard rate. A credit builder card is aimed at people with a thin or damaged credit file; limits are typically low and rates high. The table below sets out the supplied figures side by side.

Section 75: protection on purchases

Section 75 of the Consumer Credit Act covers single items with a cash price over £100 and up to £30,000 bought with a credit card. The protection applies even if only part of the price was paid on the credit card, and the claim can cover the full cash price, according to the Financial Ombudsman. Purchases paid entirely by debit card or bank transfer are not covered by Section 75. That distinction is the practical one: the same item bought on a credit card can carry statutory protection, while the same item bought by debit card does not.

The £100 lower limit is a cash price test, not a deposit test. A £150 item bought with a £20 credit card deposit and the rest by debit card falls within Section 75 because the cash price is over £100 and part was paid on the card. The £30,000 upper limit means higher-value single items fall outside the protection. The rule applies per item, so a single purchase of £30,000 is at the top of the range while a £30,001 item is outside it.

Persistent debt: when a balance stops falling

FCA persistent debt rules have been in force since 1 March 2018. After 18 months in persistent debt, card firms must contact customers to encourage higher repayments. After 36 months in persistent debt the provider must offer a way to repay the balance in a reasonable period, or forbearance if the customer cannot afford it. Customers in persistent debt for 12 months are not offered credit limit increases. These are timed triggers, not discretionary gestures.

The FCA found customers in persistent debt paid on average around £2.50 in interest and charges for every £1 repaid. That ratio explains why the rules exist: a balance that is not falling is generating charges faster than it is being cleared. The 18-month and 36-month points give a borrower two fixed moments at which the provider must act. The 12-month point removes the option of a higher limit, which would otherwise allow the balance to grow further.

How to read a card offer

Start with the standard rate, not the promotional rate. When the 0% period ends the balance moves to the card's standard rate, which can be much higher than the 21.55% effective rate on interest-charging balances recorded in August 2026. Then price the transfer. Balance transfer fees are often around 2% to 4% of the amount transferred, so a £3,000 transfer at 4% costs £120 before any interest. Money transfer fees are often up to 4%, and transfers are usually capped at around 90% of the credit limit, so a £3,000 limit would cap a money transfer at around £2,700.

Worked example using only the supplied illustrative numbers. A borrower moves a £3,000 balance to a balance transfer card at a 4% fee. The fee is £120, so the transferred debt becomes £3,120. If the 0% period ends with the balance still at £3,120 and the standard rate is at the August 2026 effective level of 21.55%, the annual interest on that balance would be about £672. That is the cost of not clearing the balance before the 0% period ends. The same £3,000 moved as a money transfer at a 4% fee would cost £120, and the transfer would be capped at around 90% of the credit limit, so a £3,000 limit would allow around £2,700.

Related coverage on Kael Tripton: 0% Credit Cards UK 2026: Best Interest-Free Deals and How to Use Them Safely, Credit Card Stoozing UK 2026: How to Earn Interest on 0% Money, Cashback vs Rewards Credit Cards: Which Type Suits You?, Your First Credit Card: How to Actually Build a Credit Score With It, Best First Credit Card UK 2026: Top Picks for Beginners.

Frequently asked questions

What is the current interest rate on UK credit card balances?

The effective interest rate on interest-charging credit card balances was 21.55% in August 2026, up from 21.45% in July, according to Bank of England Money and Credit published on 29 September 2026.

How much did UK credit card borrowing grow?

Net credit card borrowing was £1.2bn in August 2026, and credit card borrowing grew 13.3% over the year.

What does Section 75 cover on a credit card purchase?

Section 75 of the Consumer Credit Act covers single items with a cash price over £100 and up to £30,000 bought with a credit card. It applies even if only part of the price was paid on the card, and the claim can cover the full cash price. Purchases paid entirely by debit card or bank transfer are not covered.

What happens if a credit card balance is in persistent debt?

After 18 months in persistent debt, card firms must contact customers to encourage higher repayments. After 36 months the provider must offer a way to repay the balance in a reasonable period, or forbearance if the customer cannot afford it. Customers in persistent debt for 12 months are not offered credit limit increases.

How much are balance transfer and money transfer fees?

MoneyHelper states balance transfer fees are often around 2% to 4% of the amount transferred. Money transfer fees are often up to 4% of the amount transferred, and transfers are usually capped at around 90% of the credit limit.