The cost of
credit card borrowing and
personal loans is not reflecting the current base rate, an industry body has claimed.
According to recent figures, the average rate on a
credit card is 12.38 per cent, only slightly over the base rate of 12 per cent.
Personal loans fare a little better, with an average margin over base rate of more than six per cent.
However, the Money Advice Trust has claimed that the cost of borrowing on the whole is not reflecting base rates, which are at a record low.
Louisa Parker, head of research and policy at the Money Advice Trust said: "The cost of borrowing… has remained entirely decoupled from the
Bank of England base rate... This also means many consumers will have seen little or no benefit from the low base rate."
The
Bank of England has justified the cost of loans and
credit cards, saying that increased credit risk and personal insolvencies are largely responsible for current prices.
Ms Parker added: "We would encourage lenders to place greater significance on the
Bank of England base rate when pricing their products."
