Banks are raising borrowing costs given coronavirus concerns
Banks are increasing the cost of personal and overdrafts as millions of people run into financial difficulties as a result of the coronavirus pandemic.
Various banks and smaller lenders have raised interest rates on three-year loans since December last year Money facts.
The data showed that large banks have raised interest rates on three-year personal loans from GBP 5,000 since December from an average of 7.6% to an average of 7.8%. The average interest rate of competing lenders rose from 6.6% to 6.7% over the same period. admiral Interest rates were raised last week from 2.3% to 5.4% for unsecured loans from GBP 5,000 to GBP 7,499 and from 3.3% to 6.4% for loans from GBP 7,500 to GBP 15,000. Then private loans were no longer offered.
Financial Conduct Authority FCA regulations require banks to charge the same amount for arranged and non-arranged overdrafts as of April 6 to make borrowing costs clearer and fairer.
After a flood of loan applications in recent days, some of the cheapest rates on personal loans have been withdrawn from lenders' offers.
In some cases, the overdraft rates will quadruple from 9.99% to almost 40% as of April 6, as the rules were approved before the outbreak.
Barclays yesterday brought a 35 percent overdraft fee to all accounts except the student account.
HSBC increased the agreed and non-arranged overdraft fees on March 14 to 39.9%, from 9.9% for arranged overdrafts by premium customers and 19.9% for standard overdrafts.
First Direct and M&S Bank overdraft fees increased to 39.9%. Halifax and Lloyds will raise rates to the same level early next month. Nationwide and Natwest already calculate 39.9% and 39.5%.
The majority of the major UK banks still have to pass on the mortgage rate cut to borrowers after the Bank of England cut rates to a record low of 0.1%.
Charities across the UK have reported a huge increase in people struggling with debt. Step Change charity for debt counseling has had visits to its website since Friday. The company reported that over the weekend, more than 34,000 people visited its COVID-19 page and 25,000 visitors visited its emergency finance page.
Consulting firm Capital economyAccording to The Times, an estimated 700,000 people could become unemployed because companies close or fire employees.
Baroness Altmann, former Minister of Pensions, suggested that banks cut all credit card interest rates from an average of more than 20% to 0.5% for six months.
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