According to the Mirror: The Mirror 26/02/2007

1 IN 7 GET LOANS TO PAY DEBT

ONE in seven adults has taken out a consolidation loan in the past three years to get their debts under control, it was claimed today.

The average amount borrowed to clear previous debt was £13,000. But six per cent needed more than £50,000, figures showed.

Unsecured personal loans were the most common means of refinancing, with more than a third choosing this option.

Remortgaging was also popular, with nearly a fifth adding to their home loan. Slightly fewer opted to transfer their debts to a zero-rate credit card.

Price comparison website MoneyExpert.com said consolidation was a good way to control debt.

Boss Sean Gardner added: “But there is a concern many see it as a way to keep on borrowing.”

IVA News thinks there’s a hidden danger here. Perhaps more research is needed to investigate the ‘robbing Peter to pay Paul’ phenomenon where people consolidate, clear their cards, and then start filling them right back up again.

According to the This Is Money:

Citibank will automatically start charging current account customers a £10 fee unless they contact the bank to tell them not to.

Is this the end of free banking? Well, perhaps. According to the Nationwide chief executive, Graham Beale,

charging fees could be a fairer proposition than the current system of free bank accounts and high charges.

‘What about free bank accounts AND NO extortionationate charges?!’ you say?

Well apparently the banks aren’t so keen on the dent that might make to their profit margins.

‘But surely banks don’t really profit from us? Surely it’s the business customers that make them their cash, not us humble consumers?’. Well we can see why you’d think so, but according to a report from This is London:

Banks are making almost twice as much profit from their customers than they did ten years ago, a report shows.

Each personal account nets them £232 a year, compared with £127 in 1997.

Suitably horrified yet? read on:

Over the same period, the combined profits of the biggest nine banks have soared to £30.7billion, a rise of 150 per cent. Only the oil industry has seen similarly spectacular returns.

The IVA News Team is expecting a backlash. Remember what happened to First Direct?

First Direct became the first bank in the UK to introduce a fee to all customers who were not depositing a salary of at least £1,500 into their current account each month.

The move provoked an unprecedented response from This is Money readers who vowed to switch their accounts away from the bank that has always marketed itself as being ‘the UK’s most recommended bank’

Banks take heed.