With Christmas just around the corner, everyone is saving up to buy gifts for loved ones. However, there won’t be much good news for credit card holders on this Christmas.

Increased interest rates will have an impact on Christmas shoppers.  Credit card firms are increasing the interest rates by approximately 7% in the coming months.

Buyers are required to pay approximately 40% interest on their Christmas gifts.

The American-owned finance giant said, the increases were to signal higher risk of some customers and ‘market conditions’.

The decision which discussed the increases as ‘legalized extortion’. This annoyed and discouraged the customers.

Gordon Brown, Lord Mandelson and other ministers declared that they would ensure credit card firms treat customers fairly.

For borrowers with a balance of £1,000, making the minimum payment of £5 monthly, the total interest bill will triple from £3,032 to £9,547.  Similarly, someone paying back £100 a month will see interest rise from £126 to £154.

This was the second time in the current year that Capital One has ‘rate-jacked’ customers it considers high risk. Over all, Industry has an average interest rate of 18.1% and is expected to increase in upcoming days.

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