Barclaycard issues warning to MILLIONS of credit card customers that bills will rise

MILLIONS of Barclaycard customers have been warned that the interest rate on their credit card is about to rise.

It could add hundreds of pounds in interest charges to customer bills.

In an email seen by The Sun, Barclaycard warns customers that interest rates will increase after the Bank of England last week hiked base rate.

The Bank increased the base rate of interest by 0.5 percentage points to 1.75% - the biggest hike in 27 years.

While millions of homeowners expected to see their mortgage repayments increase after the rate hike, credit card holders may be surprised to see that they are affected.

Interest rates on credit card are usually variable - which means they go up and down - but they aren't typically linked to the Bank of England's base rate.

In the email, Barclaycard said interest rates would move in line with the base rate increase and "your simple standard and cash interest rates will also go up by the same amount".

It said customers would pay 42p more in interest each month for every £1,000 balance on their cards as a result.

It means if you have £3,000 on your credit card for a year, it will cost you an extra £15.12 in interest.

Barclaycard added: "Depending on how you pay, your monthly payments may increase to cover this amount."

The bank said that if the Bank of England reduced base rate, its own interest rates would follow suit.

Anyone on a promotional balance, for example a 0% credit card deal, will not be affected until their deal period ends.

Barclaycard told The Sun that the interest rates on all its credit cards track the Bank of England base rate (with a small number of exceptions).

Overdraft rates are not tied to the base rate, it added.

But the bank is also increasing its mortgage Standard Variable Rate from September 1 - it will jump from 5.74% to 6.24%.

The move will add £61 a month to repayments on a £200,000 mortgage with a 25-year term - equivalent to £732 a year.

Rachel Springall, finance expert at Moneyfacts, said credit card customers will typically be contacted by their provider if their rate is about to change.

The Sun has asked other credit card providers including Lloyds Bank, Natwest, Santander and HSBC whether they will also be increasing interest rates.