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Banks Are Too Slow To Raise Credit Interest Rates

Despite recent competition in the credit interest rates offered by banks, far too many appear to be still offering incentives for customers that keep their accounts in credit, a new report has stated.

According to MoneyExpert, there has been some improvement in the typical credit interest rates is offering by high street banks, although it asserts that far too many seem to be failing to reward their customers for remaining in the black in a worsening economic environment. It suggests that while average credit interest rates have risen to two per cent - up from 1.6 per cent a year ago - there seem to be still several banks offering people a rate of less than one per cent with their current accounts.

There has been a decrease in the number of less than one per cent offerings, with more than half (56 per cent) of all current accounts offering this 'pittance' in 2007. Figures from the company indicate that currently, 45 per cent of all products offer this level of interest. Meanwhile, with the housing market faltering, consumer spending decreasing and the cost of living rising, MoneyExpert urges banks to do more to reward customers who are maintaining their current accounts in credit during tougher times.

Sean Gardner, director of MoneyExpert, commented: "It's encouraging to see banks getting their houses in order and offering better interest rates for customers with positive balances. But let's be honest - almost half of all accounts reward customers who are in the black with less than one per cent annual interest. That's an appalling return. Given there are accounts out there offering ten times that amount of interest, customers should not settle for a raw deal."

For those who have been unable to keep their financial situation in the black as the increased demands of the bleak financial environment take hold, taking advantage of debt consolidation loan may turn out an efficient course of action in preventing outgoings from spiralling further out of control.

Mr Gardner continued by stating that 3.57 per cent is a reasonable average for accounts paying above one per cent. He strongly recommended customers to search out a deal that being offered at least this level in order to make their money stretch further.

The study conducted by the company found that only 15 current accounts offered by six UK banks offer credit interest rates above five per cent, with Lloyds TSB pointed out for raising the level offered on its Plus account from four to six per cent. However, at the other end of the scale, the financial advisory company reported that most of the high street banks offered a rate of 0.1 per cent on at least one of their current accounts.

Mr Gardner additionally pointed out the importance of customer support and additional added perks that banks offer and strongly recommended consumers to make sure they were not going for a provider solely on the headline rate. He advised Consumers to make sure their chosen bank offered the right kind of facilities for their needs.

Consumers who have found themselves experiencing worsening financial problems in the last few months may wish to take out a consolidation loan in order to stem the tide of an unmanageable level of monthly repayment commitments. Indeed, as a study held recently from Lloyds TSB showed, significant numbers have been feeling the strain over the last year. According to its inflation barometer, the bank found that 90 per cent of consumers felt that the price of goods and services had increased in the past 12 months.

Seed Newsvine

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