PPI Claim News - 4/2/2010
Credit Card Reclaim: Personal loan rates are 'awful'
"Awful" interest rates on personal loans are preventing people from showing consumer confidence, a finance expert has claimed.
Ed Bowsher, head of consumer finance at lovemoney.co.uk, believes that cautious consumer spending will continue over the next few months as people opt to save and not spend, deterred by unappealing rates.
His comments come after statistics from the Bank of England (BoE) showed that, for the first time since June 2009, the amount being lent to consumers on credit cards, mortgages and personal loans had surpassed the amount being repaid.
However, Mr Bowsher said increased lending was largely attributed to mortgages only and therefore did not necessarily show an improvement in consumer finance.
"The main reason for that is at the moment personal loan rates are terrible, currently the average rate on personal loans is 12.4 per cent yet the BoE's base rate is 0.5 per cent that is absolutely awful," he commented.
The BoE's report Lending to Individuals revealed that credit card lending increased by £0.2 billion but other loans and advances fell by £0.1 billion, leaving the annual growth rate of consumer credit at -0.5 per cent.
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