Banks wring record loan rates and highest interest since pandemic began

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Experts fear lenders will leave millions struggling to make ends meet as they also cope with rising household bills, stagnant wage growth and tax rises. The Bank of England said banks raised their effective rate on interest-charging overdrafts by 0.27 points to a record 20.94 percent in December.

Meanwhile, the interest rate on new personal loans went up from 6.27 in November to 6.43 percent last month, its highest level since March 2020.

Personal finance expert James Andrews, from money.co.uk, said the comparison site found people are on average starting 2022 with twice the debt they had at the same time last year.

He said: “This is a problem that doesn’t look like it’s going away any time soon. 

“The worry is that people borrowing to meet bills now will see even higher bills in future as more of their income goes on servicing that debt as well as meeting their current costs.”

TSB has found over 82 percent are juggling higher living costs, leaving a third fearing for their finances. 

More than half of those quizzed said inflation and higher bills were their biggest concerns.

The bank’s Mark Curran said: “It’s clear that many people are concerned about the impact of bills going up and rising inflation.

“Now is the time to really get on top of your finances.”

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