UK Finance News

highest rates guaranteed!

The British Bankers Association have denied claims from consumer groups that the UK’s high street banks are ‘profiteering’ from charging high interest rates on personal finance, despite the obvious evidence that interest rates on personal loans are at a seven year high, while the base rate is at an all time record low.

Consumer groups say that even borrowers with impeccable credit history were being forced to pay through the nose for their loans because of lack of competition on the high street and the banks attitude of ‘punishing the good for the sins of the bad’ in a bid to boost profits.

Despite banks being able to borrow at just above the Bank of England base rate, average interest charges on their loan products represent the highest in seven years in some cases.

Perversely it is the high street banks that were bailed out by the taxpayer that are creaming the biggest profits, with financial website Moneyfacts saying that the highest rate on a £1,000 loan over one year  is the 23.9% offering from Lloyds TSB.

The best loan rates on offer currently are from the banking arms of supermarket chains Tesco and Sainsbury, with an average rate of around eight per cent interest.

Vera Cotrell from consumer group Which?, said:

“Borrowers are paying the price for other people defaulting and for banks not doing credit assessments properly. No other company could get away with saying, ‘Right, we’re going to charge you a lot more for this product now because of our losses.’ Banks are certainly taking advantage of the loss of competition in the market. You could probably call it profiteering.”