Banks use base rate changes to boost profit margins
by Gill Montia
Moneyfacts.co.uk, the financial website, has published new research showing that a number of High Street banks are using recent reductions in the Bank of England’s base rate to increase profit margins on their current accounts.
According to Samantha Owens, head of personal finance at Moneyfacts, Lloyds TSB has not yet passed on any base rate cuts to its overdraft customers.
Nationwide, Smile and Intelligent Finance have all reduced their interest rates in response to the last two base rate cuts, but have failed to pass on to savers the benefit of the previous three increases in the base rate.
Meanwhile, current account customers of Yorkshire or Clydesdale Bank who are in the red will be paying 4.12% more in interest than at the beginning of 2007.
Ms Owens advises consumers to look around because there are some “great rates” on credit interest and authorised overdrafts to be found.
Last week, the Bank of England’s monetary policy committee voted in favour of holding the base rate at 5.25% for March.
At least two further base rate cuts are expected this year but evidence of mounting inflationary pressures have made experts reluctant to predict the timing.
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