Loan users ‘faced with disaster’

People who use loans in order to fund their everyday activities are facing disaster as a result of rising interest rates, it has been claimed.

According to moneysupermarket.com, interest rates in the UK have been rising in recent months, which is good news for savers and could spell disaster for people who are struggling to become debt free.

The interest rate increases have come despite cuts in the base rate by the Bank of England and are viewed as an effort by lenders to “claw back profits”.

Banking groups have been hit by economic turbulence during the past 12 months and it is poorer consumers and those with debt management problems who are set to suffer most acutely as a result, the price comparison firm maintains.

“For every happy saver in Britain, there is a now a disappointed borrower,” said Tim Moss, head of loans at moneysupermarket.com.

After a series of increases, the Bank of England opted to trim its base rate of interest by a quarter-point in December 2007 and again in February this year.