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interest rates
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why have credit card interest rates not fallen?
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Snap, CC, they've increased mine too!
While the Bank of England base rate is at an all time low (1%), much of the money the British government provided to the banks, to help them through their difficulties, was effectively in the form of a loan with an interest rate of 12%. So the banks are having to add their profit margin onto 12%, rather than 1%.
Further, the moves taken by governments throughout the world to inject liquidity into the money markets, have only been partially effective. Banks are still finding it hard to borrow money from other institutions; when they can do so it's often at high rates, which they then pass on to borrowers.
Lastly, the recession means that more people are likely to find that they can't meet their financial obligations, and will default on their debt repayments. So the banks know that more of their loans will 'go bad' and they have to charge their card holders extra to cover the losses that they know they'll suffer.
Chris
While the Bank of England base rate is at an all time low (1%), much of the money the British government provided to the banks, to help them through their difficulties, was effectively in the form of a loan with an interest rate of 12%. So the banks are having to add their profit margin onto 12%, rather than 1%.
Further, the moves taken by governments throughout the world to inject liquidity into the money markets, have only been partially effective. Banks are still finding it hard to borrow money from other institutions; when they can do so it's often at high rates, which they then pass on to borrowers.
Lastly, the recession means that more people are likely to find that they can't meet their financial obligations, and will default on their debt repayments. So the banks know that more of their loans will 'go bad' and they have to charge their card holders extra to cover the losses that they know they'll suffer.
Chris
MBNA have almost doubled my interest rate!
Interest rates have been increased as the banks need to cover their losses on their bad debts so make good customers pay for the bad. The thing is a person may be a good customer but by doubling interest rates they could very well push the person into becoming a bad customer as they may not be able to meet the new rates.
Banks are not interested in loyalty, you, the customer are just a number to them. If you have savings they would love you to deposit it with them but they offer absoluting nothing for it ,so many people are withdrawing their money and paying their debts or keeping the money at home, thereby creating more of a cashflow problem for the banks so they will hike your card rates again. To me there is very little difference in the risk between keeping the money at home and being robbed or having the local bank rob you. The risk is now the same.
Interest rates have been increased as the banks need to cover their losses on their bad debts so make good customers pay for the bad. The thing is a person may be a good customer but by doubling interest rates they could very well push the person into becoming a bad customer as they may not be able to meet the new rates.
Banks are not interested in loyalty, you, the customer are just a number to them. If you have savings they would love you to deposit it with them but they offer absoluting nothing for it ,so many people are withdrawing their money and paying their debts or keeping the money at home, thereby creating more of a cashflow problem for the banks so they will hike your card rates again. To me there is very little difference in the risk between keeping the money at home and being robbed or having the local bank rob you. The risk is now the same.
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