FSB States Credit Card Interest Rates Must Not Rise
I read on the BBC News website that the Federation of Small Business has stated that the government must do something to help small businesses who are struggling with rising costs, by capping the interest rates charged on credit cards.
I thought this was a laughable notion as I don’t think that many businesses use credit cards as a means of financing their operations, and even if they did, they should really get a clue and use much cheaper forms of financing, such as loans or overdrafts.
What’s more absurd is the notion that we’re living in a time when everything is really expensive, which is clearly not true. If you look at the price of fuel over the last three months, it has fallen dramatically. Even without doing any research, just from simply using my own experience of filling up my car with petrol, I can tell you that the UK has roughly seen a 30% drop in the price at the pumps - I can remember paying 119p a litre a few months ago, I filled up on Monday and paid 86p a litre, do the maths.
A little research into the price of bread, a great indicator of inflation yields yet more interesting results. The average price of a loaf of bread in the UK has risen over the past few years from 69p a loaf in 2005 to £1.13 for a loaf in February 2008. But since then, the prices have not risen, wheat prices have fallen, a quick check on the Wall Street Journal website markets data section and I can see that wheat prices have fallen from the high back in February this year.
So with the price of oil coming down, and directly from that the cost of petrol, diesel and gas falling, added to that the fact that wheat prices have fallen, and I can’t really see how things are still getting more expensive.
Not to mention that the Bank of England base rate has fallen from a high of 5.75% back in November 2007 to its lowest rate since 1951, at currently 2%, the cost of borrowing for many UK consumers and small businesses has fallen dramatically. What the Federation of Small Business should be lobbying the government about is the weak pound, as this will have a far worse effect on UK export businesses, and the cost of importing goods, which impacts UK consumers and businesses alike.
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