The past two years have seen credit card companies imposing major interest rate hikes, leaving householders desperately trying to balance their books. The average rate has risen from 14.9% to 16.4% in this time, seemingly as a direct result of companies being ordered to stop demanding unfair penalty charges on late or missed payments.

In April 2006 it was announced by the Office of Fair Trading that the standard penalty charge of £25 was unfair, and that a lesser charge of £12 would be the most a card company could enforce. However, while this was a welcome bit of news for those regularly affected by penalty charges, it has led to the increase in interest rates that will affect many more.

The 1.5% increase will particularly affect householders who have found their budgets squeezed with the increase in groceries, mortgages and fuel, often relying on their credit cards to get by and making just the minimum payments each month. Also affected are those who use their credit cards in ATM machines; the interest on withdrawals is often higher than that on purchases. Using a credit card abroad could also result in punishing fees and interest rates.

On the bright side, the number of credit cards with a 0% introductory rate has risen from 58 to 85 in the same two years, so it may be worth transferring your existing balance to one of these and taking advantage of a 9 – 12 month interest free period. If you have a good credit history this should be easy to do. For those with a less than perfect score, you may find you cannot get an interest-free card, but you could still find a lower rate so it's worth looking around.

It's always best to do a comparison of credit cards before applying. To do so could save you a tidy sum later on. 0% credit cards are ideal if you have a balance to transfer. If you do your research and don't rush into things, your credit card can be your friend.