New research has shown unsurprisingly shown that loan and credit card rates have rocketed since 2006. The figures show that personal loans with interest rates of under 7 per cent are no longer available, with the best deal currently available offering 7.2 per cent. The research commented that a five year loan of £10,000 would now cost £423 more than it would have two years ago. To date, lenders have been able to keep interest rates relatively low as a result of their payment protection insurance revenue, though with those fees coming under increasing scrutiny, banks are having to increase their interest rates.
The research also revealed that credit card interest rates have also risen sharply in recent years, with an average increase of over 5 per cent. Whereas the average rate stood at 18.9 per cent in 2006, that figure has grown to 24.39 per cent. These figures are significantly higher due to the higher risks faced by lenders in granting credit, as it is a sign that people may not have the money to pay then and are relying on future income. The research claimed that if someone paid off a cash advance balance on a credit card of £1,000 at the minimum 2.5 per cent a month, it would take nearly 31 years to pay back.
Credit Card and Personal Loan Rates Up Sharply
Wed, 02 Jul 2008
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