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Personal loans will be costlier now
Added: (Sat May 03 2008)
London (Longdogfinance) May 03, 2008: Nationwide,the UK's largest building society will follow the majority of lenders by raising its rates by up to 1% .This increase will take the interest rate on its £1-3,000 loan to 17.4%. Now, the interest rate is 1.5 percentage points higher than the rate on its credit card. This means the organisation rates some of its personal loan plans as risky as its credit card debt, a sign of institutions' tightening lending practices following the credit crunch.
It would now be cheaper for Nationwide customers to bypass a personal loan and instead pay for any services or products using their credit card. Plastic money is traditionally a much more expensive form of borrowing. It follows a spate of interest rate increases in the loan market over recent weeks. Barclaycard, Lombard Direct, AA, NatWest and Tesco Personal Finance have also pushed some of their rates up in the last two weeks. Barclaycard has withdrawn the one time best buy product offered through its Masterloan brand.
Since the beginning of 2008, more than half of lenders offering personal loans have made changes to their rates in order to combat credit crunch. Other banks that have increased their personal loan rates in last month by one percentage point or more include Royal Bank of Scotland, Halifax, First Trust Bank and Northern Bank.
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