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Banks are having to write off record levels of 'bad debts' on their credit cards, Bank of England figures have revealed.

The figures show the total value of write-offs doubled to £1.6 billion in the third quarter of 2009; a steep rise from the £800 million in the two previous quarters.

In all, bad debts totalled £3.2 billion, reflecting the financial downturn and the realisation that money would not be repaid by defaulting borrowers.

But banks responded by reducing their borrowing limits and becoming more cautious about who to offer loans and mortgages.

David Black of financial consultancy Defaqto said: "HSBC, NatWest and RBS will only offer new credit cards or unsecured loans to their current account customers."

"Banks also want to sweep bad news into one year's accounts to make future years look better," he added.

Credit card interest rates may rise as lenders and banks look to recover their losses. The Bank of England's figures show that as of last November, the average credit card interest rate was 15.89 per cent.

Written by Alex Adams

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Credit Cards	Balance Transfers	Purchases	APR Representative (Variable)
	Tesco ClubCard Purchases Credit Card
	0% 9 months 2.9% fee	0% 16 months	16.9%
Representative Example: The annual purchase rate is 16.9% p.a (variable) so if you spend £1200 your representative apr will be 16.9% p.a (variable)
	Barclaycard Platinum With BT (27 Mths)
	0% 27 months 3.5% fee	0% 6 months	18.9%
Representative Example: The annual purchase rate is 18.9% p.a (variable) so if you spend £1200 your representative apr will be 18.9% p.a (variable)
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