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Report: Banks Are Too Slow To Raise Credit Interest Rates
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Despite recent price wars in the credit interest rates offered by banks, too many are still offering low incentives for those who keep their accounts in credit, a new report has asserted.
According to MoneyExpert, there has been an improvement in the average credit interest rates offered by high street banks, although it asserts that too great a number are failing to reward their customers for remaining in the black in a worsening economic environment. It suggests that while average credit interest rates have risen to two per cent - up from 1.6 per cent a year ago - there are still a number of banks offering customers a rate of less than one per cent with their current accounts.
There has been a decrease in number of sub-one per cent offerings, with more than half (56 per cent) of all current accounts offering this "pittance" in 2007. Figures from the group suggest that currently, 45 per cent of all products offer this level of interest. However, with the housing market faltering, consumer spending decreasing and the cost of living rising, MoneyExpert urges banks to do more to reward customers who are keeping their current accounts in credit during tougher times.
Sean Gardner, director of MoneyExpert, said: "It's encouraging to see banks getting their houses in order and offering better interest rates for customers with positive balances. But let's be honest - almost half of all accounts reward customers who are in the black with less than one per cent annual interest. That's an appalling return. Given there are accounts out there offering ten times that amount of interest, customers should not settle for a raw deal."
For those who have been unable to keep their finances in the black as the increased demands of the gloomy financial environment take hold, taking out a debt consolidation loan may prove an effective course of action in preventing outgoings from spiralling further out of control.
Mr Gardner continued by stating that 3.57 per cent is a healthy average for accounts paying above one per cent. He urged customers to search out a deal that offered at least this level in order to make their money go further.
Research conducted by the group found that only 15 current accounts offered by six UK banks offer credit interest rates above five per cent, with Lloyds TSB noted for raising the level offered on its Plus account from four to six per cent. Meanwhile, at the other end of the scale, the financial advisory firm reported that the majority of high street banks offered a rate of 0.1 per cent on at least one of their current accounts.
Mr Gardner also noted the importance of customer support and other added perks that banks offer and urged consumers to make sure they were not choosing a provider purely on the headline rate. He advised Britons to make sure their chosen bank offered the right kind of facilities for their needs.
Consumers who have found themselves experiencing worsening money problems in recent months may wish to take out a consolidation loan in order to stem the tide of an unmanageable level of monthly repayment commitments. Indeed, as a recent study from Lloyds TSB showed, many people have been feeling the strain in the last year. According to its inflation barometer, the bank found that 90 per cent of people felt that the price of goods and services had increased in the past 12 months.
Abbi Rouse writes for All About Loans. Our visitors can apply online for bad credit secured loans. We also specialise in the cheapest loans online, and UK consolidation loans
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