| Avoid interest rate 'roulette'
Consumers are being urged to take measures to ensure they are able to cope with any further rises in the Bank of England base rate.New research from Legal & General shows that in the last 30 years the bank's interest rate has increased 58 times, on each occasion putting homeowners and borrowers under pressure.The rising cost of borrowing makes expensive forms of debt, such as credit cards, an even less attractive personal finance option."Borrowers will be waiting to see if they are going to be in the red or the black in the base rate roulette next week," said Stephen Smith from Legal & General."Rates are still at a relatively low level compared to 70s and 80s, and many people would struggle with today's debts at yesterday's prices. Whilst the boom and bust has flattened out since the turn of the millennium, borrowers are still facing a probable hike in rates in the near future," he added.Consumers who are feeling the strain from the three successive rate rises – and who are worried about the likely prospect of further rises – can use a secured loan or homeowner loan to help cut their monthly outgoings.© Adfero Ltd .
That slow killer in your wallet
Do your bit for society. Use plastic, reads a very cleverly worded advertisement of a credit card, where the card issuer promises to contribute a sum to a well-known charity, if you spend money through its cards.
The bank also makes it very convenient to pay off the money thus spent in easy installments by allowing you to pay only 5% of the total amount due.
The only fly in the ointment is the interest that the bank charges if you do not pay off the full amount on the due date. The average interest rate charged on the amount revolved (bankerspeak for the amount allowed to be rolled over and paid later) is around 34% per annum.
I am sure you have wondered why the average rate of interest on credit cards is around 34% per annum when the average rate on a home loan and personal loan is around 10% and 18%, respectively? There are several reasons for this.
Realty bite: ICICI ups home loan rate by 1%
MUMBAI: ICICI Bank, India's second largest bank, on Saturday raised the interest rate on its home loans by 1%, a hike that will crush new buyers with a minimum interest rate of 12% on loans. The decision follows the Reserve Bank of India's decision on Friday to increase the rate at which it lends to banks.
This is the fifth increase in ICICI's rates since May last year, when housing loans were going for only 8.5%. The latest hike will increase the equated monthly instalments payable by Rs 60 for every Rs 1-lakh loan taken for a tenure of 15 years. ICICI has also increased the broad floating reference rate that determines other consumer loans like car and personal loans to 12.75%. The benchmark rate at which it will lend to business is also up a percentage point to 15.75%.
Interest rates on the up: your next move?
The interest rates on personal loans and home loans have shot through the roof. People have no idea whether to go in for personal loans or not. In the last four months, the interest rates on personal loans have gone up 2% to 2.5%. This translates into an increase of Rs 150 in your equated monthly installment (EMI). The impact has hit entitlement of the loan, too, which has come down by 5%-10%. Earlier, you could get a loan of up to Rs 5 lakh if you were earning Rs 20,000 per month. Now, the same salary gets you Rs 4.5 lakh. Rajiv Jamkhedkar, Business Manager, Citibusiness, Citibank, gives you tips on what to do next. EXCERPTS FROM AN INTERVIEW WITH CNBC-AAWAZ Are people going in for personal loans? What is the trend? A lot of people are going for personal loans, which has seen 30% growth in the last two years.
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