Interest rates on unsecured loans have been rising significantly, it has been found.
Despite the Bank of England's recent base rate cuts, Moneyfacts.co.uk has revealed that some rates have risen by more than three per cent over the past 18 months.
While 8.6 per cent was typically charged for unsecured loans of £5,000 in June 2007, payments have now jumped to an average of 12 per cent.
Analyst at the site Michelle Slade remarked: "Rising unemployment and a declining economic outlook have meant the risk of customers defaulting on unsecured lending has increased. As a result, borrowers are paying a significantly increased rate."
She added that the decision by some lenders to stop selling single premium payment protection insurance (PPI) alongside their products could see even further increases, as these were sometimes used to subsidise lower charges.
This week Barclays, Alliance & Leicester, Lloyds TSB, The Co-operative Bank, NatWest and the Royal Bank of Scotland all announced that they would no longer be offering single premium PPI from the end of this month.
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