HSBA, NWG, LLOY: Stocks to eye amid rising credit cards interest rates

Highlights:

• Credit card interest rates have reached the highest levels in 24 years, as per comparison site Freedom Finance.
• According to website, the average interest on credit cards reached 21.66% in July, 0.23 percentage points higher than in June.

Rising inflation and the cost of living crisis have forced Brits to dig into their savings or switch to borrowing to make both ends meet. Higher groceries and energy prices have resulted in people spending more. Recent data from the Office of National Statistics (ONS) has shown people are turning to credit more than usual to help with the rising prices.

However, there's another blow to those who use credit cards. As per figures from the comparison site Freedom Finance, the average interest rates on credit cards have hit a 24-year high. Data from the website showed that the average interest on credit cards reached 21.66% in July, 0.23 percentage points higher than in June. It is also the highest since December 1998.

On the other hand, interest on personal loans has also reached a six-year high. Data from the site shows the interest on £10,000 personal loans has touched 4.18%, while it is 8.27% for £5,000.

The higher rates are a result of a series of interest rate hikes by the Bank of England to curb inflation. Since December 2021, the central bank has raised the interest rates from 0.1% to 1.75%, with the latest hike being 0.50 percentage points.

With regard to the latest numbers on credit card interest rates, let us look at some FTSE-listed financial services providers and how they have been faring.

HSBC Holdings Plc (LON: HSBA)

Global banking and financial service provider HSBC holds a market capitalisation of £108,925.46 million, and over the past 12 months, its share value has jumped 35.03%. On a year-to-date basis, the stock's return has reached 23.35%. With an EPS of 0.62, the stock was trading at GBX 553.50, up 1.47% as of 2:27 pm GMT+1 on Tuesday.

NatWest Group Plc (LON: NWG)

Another FTSE 100-listed banking and financial services provider is NatWest Group, which boasts of a market cap of £26,442.00 million. Investors who entered the stock one year ago have received a return of 18.13% so far. The share has an EPS of 0.25, and it was trading 0.28% higher at GBX 254.80 as of 2:35 pm GMT+1 on 9 August.

Lloyds Banking Group Plc (LON: LLOY)

The lender provides banking and financial services to retail and corporate customers not just in the UK but in several other countries across the world. It presently has a market cap of £30,085.05 million, and its shares were trading 0.28% higher at GBX 45.37 at 2:38 pm GMT+1 on 9 August. The 12-month return of the stock currently stands at -2.58%. The year-to-date return is -5.06%, while the earnings per share is 0.08.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated, taking into consideration the associated risks.