Credit-card firms have been accused of inflating their interest rates to recoup the cost of cutting fees and charges over the past two years, writes Elizabeth Colman.

Default fees – levied for failing to pay minimum balances – were capped at £12 by most firms after a ruling from the Office of Fair Trading two years ago. Most firms previously charged about £25 for each default.

However, an analysis by financial data firm Moneyfacts shows credit card rates are an average 1.5% higher – adding £755 on a £5,000 balance for borrowers who repay 2.5% a month. Firms have also increased the average interest rate on cash transactions from 18.1% to 24.3% – and increase of more than 6%.

Earlier this month, Capital One increased the rate on its Platinum Mastercard from 9.9% to 12.9%. Yorkshire Bank has also increased the rate on its Classic Visa this year from 15.4% to 17.9%, while the Tesco Bonus Mastercard has risen from 14.9% to 15.9%.

Michelle Slade of Moneyfacts said: “Following the OFT criticism in 2006 lenders cut default charges – but to recoup lost revenue, they hiked rates and charges elsewhere. Previously only a select number of customers were penalised. Now all borrowers are paying the price.”

According to Apacs, the payments association, there are 30.8m credit-card holders in Britain, or 62% of the adult population. The average debt per cardholder is £1,856.

Advisers said the rate rises further bolstered the argument for paying off credit-card balances every month – though this might become increasingly difficult for some borrowers as household costs increased.

Slade said: “For any customer who pays their bill in full each month, the rate increase will have no impact, but with many households struggling with increasing financial pressures, those who only repay the minimum will be hardest hit.”

More card companies are offering introductory 0% balance transfer and purchase deals, which are now available for up to 15 months compared with 12 months two years ago, Moneyfacts said.

In April 2006 there were 58 cards offering 0% introductory purchase deals of up to 10 months. Today there are 85 with deals of up to 12 months. There is also an increase in the number of cards offering 0% balance-transfer deals, from 82 in April 2006 to 99 today.

Virgin Money offers 0% on balance transfer for 15 months and 0% on purchases for three months.

However Steve Willey, of Moneysupermarket, a comparison site, warns that cardholders should be wary of 0% purchase deals paired with 0% balance transfers.

He said: “If you make just one purchase on most of these cards your repayments will go toward paying off the balance, not the purchase, if your balance amount is larger than the cost of the item. You will then incur interest on the purchase until the balance is paid off.”