IT COSTS MORE TO GET IN DEBT

ABOVE: Funding your fun with loans will now cost you more

23rd September 2009

By Michelle Carter

THE cost of borrowing is on the rise.

In the last couple of weeks three firms have upped their rates for new borrowers by up to 1.2%.

And while that may not seem much it will add an extra £322 interest on to a £10,000 loan over five years.

As we're already paying out £181million in interest every day our bills are going to soar.

Since the beginning of the month Marks & Spencer Money has increased some loans by 1.2%, Egg upped its £3,000 to £20,000 loans by 1% to 14.9% and Alliance & Leicester put up its £7,500 to £15,000 loans by 0.8% to 8.7% and its £5,000 to £7,499 loans by 0.1% - to 8.9%.

Louise Bond of comparison site uSwitch.com said: "Last year 1.3million people used an unsecured personal loan.

"But the number of loans available has dropped by more than a third.

"If you are looking for a loan it is worthwhile asking your existing provider first."

Best rates for existing customers on a £10k loan over five years are Nationwide (7.7%), Tesco (7.9%) and Sainsbury's (7.9%).