Tens of thousands of Virgin Money credit card customers have had their interest rate hiked by as much as 50per cent.
Customers who are deemed more risky than when they first took out the card are likely to have been targeted and now have to put up with the rate hike or pay off their debt.
They can decide whether to stick with a more expensive rate of borrowing or reject the rise. If customers opt out, they must inform Virgin and wipe the balance. Moving to another card would trigger a balance transfer fee costing an average 60 for a 2,000 transfer.
Some borrowers have seen rates climb from 16.8per cent to nearly 25per cent well over the average credit card rate of around 18.4per cent.
On average, credit card interest rates from all banks have actually fallen compared with a year ago, when the average rate was 18.9per cent.
Virgin Money, owned by Sir Richard Branson, is gearing up to launch an assault in High Street banking after buying State-owned Northern Rock for 747million last November.
The companys credit card business is run by MBNA. A spokesman for Virgin Money says: MBNA offers an opt-out system, or right to reject, in line with industry standards, which we fully adhere, too.
We are realigning a portion of our business that is priced below what we consider is prudent in the current market or a customers individual circumstances.