Virgin Money has raised interest rates on its credit cards by almost 50% in a further blow to borrowers faced by recent mortgage rate hikes.
Rates on purchases using Virgin credit cards have risen from 16.8% to 24.9% for some customers, while balance transfer rates have increased from 18.9% to 27.9%.
Thousands of selected Virgin Money customers have been earmarked for the increases following a review of the lender's database and they were written to last week and told they can either accept the rises or they will need to pay off their balances.
Sir Richard Branson's Virgin Money, which recently bought Northern Rock, said the rises reflected "responsible" lending and were part of a regular review taking customers' performances and external risks into account.
Virgin Money has around 2.5 million credit card customers and less than 1% of them are understood to be affected, the equivalent of fewer than 25,000 people.
Sir Richard vowed to improve British banking for customers and shake up the industry with "simple, fair and transparent" deals after nationalised Northern Rock was taken over in a £747 million deal.
Customers have been given 30 days notice of the rises and they have 60 days to tell Virgin Money if they do not accept them.
Lenders have been offering some of their cheapest ever deals as the Bank of England maintains the base rate at a 0.5% low, but analysts expect them to tighten up on borrowing this year amid the weak economy and the fallout from the eurozone crisis, meaning more lenders could follow Virgin Money's example.
Despite three years of rock bottom interest rates, Saga found last week that the typical credit card APR has been rising, from 15.73% in 2008 to 17.32%.
Virgin Money's move follows a spate of lenders including Halifax, RBS-NatWest and Clydesdale and Yorkshire Banks announcing mortgage rate rises, affecting more than a million people, blaming the increased cost of funding mortgages.
Kevin Mountford, head of banking at Moneysupermarket.com said: "Rates on credit cards have been rising over time."
He said some lenders have been "repricing" customers in this way for a number of years to help them "balance the books".
Mr Mountford said: "From a customer point of view they are able to reject it. You will no longer be able to use the card but you will be able to pay down the balance using the old rate over time.
"We're in a low base rate environment, banks don't have flexibility on where they can make their money. They are looking at other ways to make up the revenue loss."
A Virgin Money spokeswoman said: "We periodically review credit risk across our portfolio and will change interest rates - up or down - based on those reviews.
"These reviews take into account a customer's performance with us as well as a range of external credit risk factors.
"If we raise a customers' rate based on risk, we are doing so because we feel it is the responsible thing to do."
She said customers were notified in advance and they can reject the new rate and pay off the outstanding balance at the existing rate, in accordance with industry principles.
But one Virgin Money customer told the Daily Telegraph: "Mr Branson has clearly lost his touch with consumers."