Even though the Bank of England's base rate is at an all time low and has been for nearly a year, rates on risky unsecured debts are at a 12-year high.

Since 2006 as the economic downturn took hold, credit card rates have steadily increased, with the average rate today hitting a 12 year high of 18.8%, according to Moneyfacts, and now they are higher than they were at the end of the nineties.

Michelle Slade, of Moneyfacts says: "The UK continues to suffer from a high level of unemployment and providers are worried about the increased risk of customers not repaying their debts. This increased risk continues to be passed on to both new and existing credit card customers through higher rates."

The website says that borrowers with £5,000 debt on the card, who just repay the minimum each month, will now repay an additional £2,289 over the life of the debt than they would have in February 2006.

Of course, on top of that there are charges such as balance transfer, cash withdrawal and foreign transfer fees also continuing to go up, leaving unsecured debt customers paying more across the board.

Andrew Hagger of Moneynet.co.uk says: "Just because you sign up to a card with an attractive rate, it doesn’t mean it’s going to remain that way, with increasing numbers of customers receiving notification that their rate is being hiked even though they are adhering to the terms and conditions of their agreement.

"With the UK suffering from a surge in unemployment and the potential of more job losses to come if public spending is curtailed, just as with unsecured personal loans, it’s no surprise to see rates remain stubbornly high."

If your unsecured debts are rocketing and becoming even harder to manage it might be time to move your unsecured debts onto your mortgage. By consolidating your unsecured debts onto your secured asset you may find you pay a lower rate. That means you have more money each month to pay off your debt, not just service it. Talk to a mortgage expert about moving your debt to a cheaper, safer alternative.

SOURCE: Moneyfacts.co.uk, Moneynet.co.uk, 16/02/10

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