Banks charging high rates of interest on their credit cards are forcing those who are already in debt into further problems rather than discouraging lending, it has been stated.

This is the opinion of Phil Perry, director of Ark Financial Planning, who said that instead of doing people a favour and discouraging borrowing, what is happening is those in debt are being trapped in a vicious circle.

He added that for many people the only form of credit they can currently obtain is through a credit card, so they have been forced to continue this form of borrowing, even though they know the interest will be high.

These comments follow the news that credit card interest levels are at the highest they have been for the past 12 years, according to moneyfacts.co.uk, with the average rate currently standing at 18.8 per cent.

Borrowers will now be paying back £2,289 more on a loan of £5,000 than they would have in February 2006.

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