Paypal will be upping the interest rate it charges its credit customers by 2% in September.
Credit customers have been informed of the hike in interest while the Bank of England's base rate has also risen.
Yesterday, the Bank of England announced that its base interest rate was to rise from 4.5% to 5%.
This was the biggest single hike since February this year and the highest the rate has been since the 2008 financial crash.
The move means that mortgages and borrowing will become more expensive.
For Paypal credit customers were told in an email they received that the move would mean they "may pay more each month and take longer to repay any outstanding balance on your account".
The global payment platform told customers that for every £500 on their balance they would be paying 69 pence more every month on interest.
It added: "It shows one month’s additional interest only – if you don’t repay your full balance each month then you also pay interest on that interest."
Paypal said the change has been made in response to an increasing in the "underlying costs of us providing Paypal credit to our customers".
This included increases in the cost of servicing Paypal credit accounts and the costs of funding.
Paypal also said if you are on the current promotional offer of 0% for four months, you will continue to receive this but if the offer ends after September 1 than any part of your balance which has not been repaid will be charged at 23.9% interest.
Credit interest rates are normally variable so will change from time to time - however, in recent years some lenders have started to link their credit card rates to the Bank of England's base rate.
You would usually get 30 days' notice of any change to the interest rate on your product however Paypal has given its customers 10 weeks notice.
A Paypal spokesperson said: "PayPal Credit customers are being notified of an increase to their standard variable rate of interest, with customer notifications being issued from June 15 to June 30 2023. The new rate will be effective on outstanding balances from September 1 2023.
"This change is in response to an increase in the underlying costs of us providing PayPal Credit to our customers.
"We encourage customers to contact us with any questions or concerns the change could impact on their current financial situation.”
