Cahoot has advised its customers to move their loans to its parent company Abbey after it announced plans to increase its personal loan interest rate.
Previously 9.4 per cent, Cahoot now plans to raise the rate to 14.9 per cent by the end of the month, reports the Independent.
The financial provider stated its intention to stop offering personal loans and credit cards to new customers at the end of September.
And the 9.4 per cent interest rate was widely considered to be one of its only remaining competitive products until Thursday’s announcement. Online bank Cahoot informed its customers by letter giving them two weeks before the rise to find a new deal.
This development in the personal finance sector is one of a number that are seen by many as an attempt to recoup costs previously obtained via credit card default fees.
HSBC-owned first direct bank recently announced it is to levy a charge on its previously fee-free current account while this week Lloyds TSB introduced a three per cent rise on its overdraft facility.
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