Personal loan and credit card rates rise as Bank rate drops
Personal loan and credit card interest rates are failing to drop - despite the Bank of England dropping its rates from five per cent to 1.5 per cent since October.
As the government pushes banks to increase lending and drop mortgage rates, consumer credit rates have been rising steadily.
Over the last 12 months, the average rate on a personal loan of £5,000 has risen from 10.06 per cent to 11.84 per cent, according to data from Moneynet.co.uk.
Credit card purchase rates have also risen from 16.77 per cent to 17.48 per cent, while the credit card cash transaction rate is up from 23.88 per cent to 25.29 per cent.
Overdraft rates are also up.
The average authorised overdraft interest rate now stands at 14.31 per cent - up from 13.01 per cent in January 2008.
The Bank of England's Credit Conditions Survey points to unsecured lending to tighten further in the coming months - as lenders reduce credit limits on credit cards and tighten lending criteria in general.
"Consumers are getting a raw deal all round," said Andrew Hagger at Moneynet.
"While the 'good news' headlines herald the base rate cuts, the reality for the man on the street, apart for those already on a tracker mortgage, is that average rates on savings, credit cards, loans and overdrafts have all taken a turn for the worse."
The rise in lending costs comes as saving rates are falling further.
"Average rates on variable rate savings are being decimated, down from 4.1 per cent to 1.29 per cent since last January," Mr Hagger said.
"We now have a situation where 210 variable rate savings accounts are paying 0.5 per cent or less, so there is a possibility that some savings rates may be virtually wiped out."
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