Switching loans could save consumers money

Consumers with unsecured personal loans could save up to £1.25 billion in interest by switching to a different provider, according to new research.

Findings from uSwitch.com reveals that those borrowers with an £8,000 loan over five years could save £166 by switching to the current best buy interest rate of 6.5 per cent.

Mike Naylor, personal finance expert at uSwitch.com, blamed “confusion and apathy” for holding consumers back from making savings on their existing loans.

“2.5 million people think the savings from switching a loan mid-term are too small. 1.6 million loan customers said it’s too much hassle and the most the discouraging news is that 14 per cent wouldn’t even consider doing it,” he said.

uSwitch urged consumers to consider changing their loan provider while they still can as many providers are now operating personal pricing, an option which prevents customers comparing prices.

Meanwhile, figures from the Office of National Statistics revealed that disposable income is at its lowest level in a decade.

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Consumers have ‘misconceptions’ about building societies

Most consumers prefer building societies to banks, a new survey by Fool.co.uk has suggested, in spite of at least a third of respondents not even knowing what the different between them is.

Results from the study showed that building societies consistently scored higher than banks in consumer’s eyes. Six out of ten people preferred to take out mortgages with building societies and a similar proportion felt more comfortable discussing personal finances with one.

Four out of ten people even professed to a belief that building societies have their best interests at heart – a notion that David Kuo, Head of Personal Finance at Fool.co.uk, described as “schmaltzy”.

Whereas banks are public companies owned by their shareholders, building societies are owned by their members, but Mr Kuo warned that does not necessarily mean they provide a superior service.

“Best-buy tables have indicated that banks provide better products than building societies in three key products areas, namely credit card, savings accounts and mortgages,” he said.

The new survey also revealed a degree of ignorance among consumers. A third of respondents could not explain the different between a building society and a bank, while a quarter were unaware that Alliance & Leicester is now one of the latter.

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