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Credit Card Fees On The Rise

Interest Rate Rise

As lenders continue to fight rising bad debts, consumers will eventually carry the cost through a rise in rates and fees. Funding constrictions and the lack of borrowing is also having an impact on lender costs.

The rise in regulations and government scrutiny is shaking up the market to the point were by the current fee-free model on credit cards may be unsustainable.

“Lenders will be unable or unwilling to increase supply sufficiently to match demand. This will leave consumers surprised at both the cost of credit and the difficulty in gaining access to it,” PricewaterhouseCoopers partner Richard Thompson said. (more…)

New Bank Funding And Asset Sales

Lloyds And RBS Banks

Lloyds Banking Group and Royal Bank of Scotland will get another £31 billion from the government and have both agreed to sell hundreds of businesses and branches to appease the EU competition concerns over state aid.

The deal announced yesterday allows the UK to reduce it’s holdings in Lloyds and RBS which are a potentially critical tying up of funds as Britain struggles with a budget deficit.

Months of uncertainty were ended as Lloyds revealed that they would drop out of the government insurance scheme for bad debts by raising £13.5 billion in the world’s greatest ever rights issue, as part of a capital raising plan aimed at sourcing £21 billion. (more…)

Mainstream Lender Unsecured Loan Rates Rise

Unsecured Personal Loans

Unsecured personal loan interest rates have risen by up to 1.2% for three unsecured loan providers. This amounts to an extra £322 in interest payments for a loan of £10,000.

This rise in borrowing rate has come at a difficult time as consumers struggle with their debt, making debt consolidation more expensive with some providers.

The three mainstream providers, Alliance and Leicester, Egg and Marks and Spencers Money, raised their rates as of 1st September.

The personal loans market has declined over the last year with just 36 loan products available at this time compared to the 57 that were available at the same time last year.

Despite the historically low base rate set by the Bank of England the drop in loan products available and the slight rise in loan rates is putting pressure on consumers looking to consolidate their debt. (more…)