Despite the fact that Natwest and the Royal Bank of Scotland are now largely publicly owned, the banks have made the decision, in the midst of the worst recession in a generation to raise the cost of credit, leaving the consumer grappling with even higher rates. Each raised purchase and balance transfer rates for both new and existing customers on their Classic cards by 3% from 16.9% to 19.9%. This comes in spite of the fact that the Bank of England have held the base rate at 0.5%. Meanwhile, the private banks are largely making their rates more competitive.

Experts tend to agree that the state owned banks are attempting an opportunistic move in their increases but the question is, will it backfire in light of decisions by other credit card providers not to increase rates?

Barclaycard, Egg and the AA have all extended their introductory 0% balance transfer periods for new customers and provider MBNA has introduced a card that offers a set 5.9% per year rate on balance transfers for life.

With other more competitively priced alternatives on the market, it seems that the publicly owned banks are setting themselves up to see many of their disgruntled customers walk away with their latest attempt to consolidate their own debts.

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