Report Banks Are Too Slow To Raise Credit Interest Rates

Report Banks Are Too Slow To Raise Credit Interest Rates
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.

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Abbi Rouse writes for All About Loans. Our visitors can
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