Clients in the Black Are Not Rewarded by the Banks
A recent report alleges that in spite of the price wars amongst the
that the majority of them are not offering good enough incentives for those whose accounts are in credit. MoneyExpert claim that the average interest rates on credit have gone up in the high street banks but also profess that not enough of them are compensating their clients for prevailing during such a difficult economic downturn. It proposes that even though typically there has been a rise to 2% of credit interest rates – up from 1.6% last year – customers are still being offered a less than 1% rate by many of the banks on current accounts that are in credit.
These proposals below 1% have fallen but 56%, more than half of all current accounts, were being offered this poor rate in 2007. Current figures suggest that 45% of all the products available offer this interest level. MoneyExpert are prompting the banks to compensate their clients who stay in credit during these tough times that the economy is experiencing with the cost of living increasing, the housing market stumbling and consumers not spending.
The Director of MoneyExpert, Sean Gardner, said: “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 1% 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 the customers not in the fortunate position of being in the black, due to the continual pressure of this bleak financial climate, the course of action for many may be a debt consolidation loan to hopefully control and manage outgoings.
Mr Gardner advised that for accounts paying over the 1% that a sound average rate would be 3.57% and he strongly urged consumers to look for and only settle for this rate or above to make sure that they are getting good value for their money.
The group have carried out research and discovered only 6 UK banks offered 15 current accounts proposing credit interest rates over 5%. Lloyds TSB have distinguished themselves with their 2% increase on their Plus account from 4% to 6%. The financial advisory firm outline the other end of the spectrum, that most high street banks offered 1% on a minimum of one of their current accounts.
Mr Gardner also advised on the significance of banks supporting customers and any other advantages that a bank might offer other than a good headline rate. The client must be sure that they choose a bank that can provide all the facilities that they require.
The consumers who have found themselves struggling to keep up with the increased costs more recently may well have had to consolidate with a loan to be able to manage their repayments every month. In a recent study from Lloyds TSB they demonstrated that in the last year more and more people are feeling the pinch. Their inflation barometer implied that 90% of people felt that there had been a price increase on goods and services in the last 12 months.