In a week when the chancellor unveiled his latest austerity measures, the banks showed no signs of pulling their horns in as a raft of low cost personal finance deals hit the shelves.
In the personal loans market Santander and Cahoot both cut interest rates for loans of £5,000 to 4.5% APR, and have closed the gap on market leader Zopa in number one spot at 4.3% APR.
If you’re in the market for a slightly larger loan then the 3.6% APR rate from Cahoot will be good news as lending rates continue to hit new lows for borrowers with a good credit record.
The 3.6% rate means Cahoot now shares the top spot with M&S Bank, Nationwide Building Society and Zopa.
The fight to win new customers in the credit card sector shows no signs of fizzling out either as Virgin Money this week launched what it called its most boring credit card with no interest to pay on purchases, balance transfers or money transfers for 24 months.
Barclaycard, the dominant player in the 0% credit card balance transfer market has just reduced the balance transfer fee on its 36 month platinum card from 2.39% to 1.99% a move that will cut the cost of every £1,000 switched by £4.
Unfortunately it’s not all good news. If you only need to borrow a smaller amount the market has become more competitive but rates are still much more expensive than those seen at £5k and £7.5k plus.
For example on a loan of £2,000, Zopa at 7.6% APR and RateSetter at 8.3% APR are cheapest but most high street lenders are still charging interest rates well into double figures.
A different but cheaper option for smaller sums is an MBNA platinum credit card where you can transfer money from the card to your bank account for 0% for 2 years subject to a one off 1.70% money transfer fee – on £2000 that’s just £34 over 2 years if you clear within the 2 year term.
When you realise that Barclays and NatWest are charging 22.9% APR for a £2,000 loan and over 2 years and will charge you more than £461 in interest charges, the MBNA money transfer option looks like a smart move if you’re financially disciplined.
Now doubt George Osborne would like to see this low cost credit boom continue to keep driving consumer spending and helping the wider economy.
However these deals won’t be around for ever, so if you’ve got a major purchase in mind that needs financing it may be better to make your move sooner rather than later.
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