Hikes in personal loan rates may mean credit cards are more viable option
According to a recent report some consumers may now be better off using their credit cards as a form of finance rather than opting for a personal loan because loan rates have been hiked up by huge amounts since the onset of the global credit crunch. Credit cards are well known for the high rates of interest charged, but officials state that even so some people may find that they are the cheaper option when compared to a personal unsecured loan with a sky-high interest rate.
One recent example was the Nationwide building society, which hiked up the interest rates on its unsecured personal loans recently. This took the interest rate on some of its personal loans to a higher level than the interest rate on its credit card. Tighter lending conditions and increased wariness amongst lenders have resulted in an increase in interest rates on personal loans, as well as other forms of borrowing, leaving the consumer with some very tough choices to make.
One industry official stated: ‘It’s not only mortgage rates that continue to increase, so too have the rates and monthly repayments on personal loans.’
Consumers are also reminded that whilst most lenders advertise a typical APR on their unsecured personal loans, this is not necessarily the rate that each consumer will get, as the actual interest rate will depend on various factors including the credit rating and history of the applicant.
Now is the time for consumers to not only shop around for personal unsecured loans in order to try and get the best rate of interest, but also to ensure that they check all of their finance options in order to determine whether a personal loan is the most effective and affordable solution to their financial needs.
Recent additions:
- Nationwide asks for larger deposits from borrowers
- Mortgage lending levels remain subdued
- Credit crunch leads to increase fraud on finance applications
- Finding an affordable loan
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