Tuesday 8th of September 2009
The Bank of England official interest rate may have stood at 0.5 per cent for six months, but people with debt have not benefited, a claim suggests.
According to Moneyfacts, during this period consumers have been hit with rising costs of credit cards, overdrafts and personal loans, which could result in sky-high interest rates being frozen with an individual voluntary arrangement (IVA).
It notes that the average rate of a credit card in March stood at 17.7 per cent, which has now risen to 18.1 per cent, a 0.40 per cent change.
Likewise, the average rate of an unsecured personal loan was 11.9 per cent six months ago, but currently stands at 12.1 per cent.
Households which have been hit by rising interest rates on unsecured debt can freeze the interest with an IVA, which could give them breathing space to start clearing their balances without being hindered by interest.
"Unsecured lending costs have also increased rather than fallen, as lenders fear future increases in the number of customers defaulting," states Michelle Slade, spokesperson at Moneyfacts.co.uk.
The Credit Action report released at the start of the month revealed that every UK household pays out an average £2,637 every year in interest repayments on their total debt.
By Mark Waterman
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Bills causing you a headache? IVA answers may provide a solution
