£652 warning issued to anybody who hasn't cleared their credit card debt

A £652 warning has been issued to people who haven't paid off their credit card or loan. The average credit card purchase APR in October was 35.4%, according to Moneyfacts, and people whose balance isn't clear face bills of hundreds despite the Bank of England rate cut.

The rates on new loans are also higher now compared to last year. Moneyfacts says the average loan interest rate for someone borrowing £7,500 is 8.7% - working out at £652. Holly Tomlinson, financial planner at Quilter, said: "Lower interest rates can lead to reduced annual percentage rates (APRs) on credit cards, making it less expensive to carry a balance.

"However, it's important to note that credit card rates are influenced by various factors, and not all lenders may pass on the full benefit of the rate cut. Cardholders should monitor their accounts and consider transferring balances to cards with more favourable terms if possible." Interest rates on personal loans and car financing are normally fixed, but again, check with your lender to be absolutely certain.

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Andrew Montlake, Managing Director at Coreco commented: "Whilst this cut will be celebrated joyfully by all those looking to buy or remortgage in the near future, it is important to note that this does not necessarily mean that mortgage rates will drop substantially in the short-term. This move comes despite the Budget and the massive £40 billion tax hike having a potential future effect on inflation and interest rates, as well as the reverberations of the US election result which has sent the US stock market spiralling and weakened Sterling against the Dollar.

"Lenders have already increased their mortgage rates in the run-up to this decision, and it does seem that markets are now expecting rates to fall much slower next year than expected. However, the good news is that this shows the Bank of England is confident that even amongst all the uncertainty they have now tamed inflation sufficiently to be able to continue with their longer-term plans to reduce interest rates."

Adam Stiles, Managing Director at Helix Financial Partners commented: "The drop by 0.25% to 4.75% in the base rate by the Bank of England is fantastic news for borrowers. We wouldn't expect to see another Bank of England rate drop this year but we hope to see lenders adjust their variables rates quickly. If SWAPs come down we could see some lenders reducing rates once more, after a couple of weeks of increases. There is hope for borrowers yet."

Craig Fish, Director at Lodestone Mortgages & Protection commented: "This was most certainly the right decision, but possibly it will be the last cut for a while, as confirmed by the Monetary Policy Committee comments suggesting that the Budget was inflationary. Reductions will continue throughout 2025, but at a much slower pace."