A RATE war on personal loans looms following the launch by M&S Money of the first sub-7% rate since June, 2008. On loans of £7,500 and above, M&S Money quotes 6.9%.

According to moneysupermarket.com, the average rate for the top 10 personal loans at £3,000 is 14.39% (10.6% in November, 2007), and the average for £5,000 is 10.02% (7.41%).

Tim Moss, head of loans and debt at moneysupermarket.com, says: “At long last, the whole personal loan market is opening up. Many lenders are beginning to open their books to more consumers with more competitive deals, even below £7,500.

“Having an open and competitive loans market is vitally important.”

BARCLAYCARD has offered the UK’s first card charging 0% on balance transfers for 18 months, with a 2.9% balance transfer fee plus cashback for transfers of more than £3,000.

This was met by M&S Money with an offer of 15 months interest free credit on purchases - suggesting competition among credit card firms is set to hot up.

These moves mean the average promotional balance on the top five balance transfer credit cards rises to 16.6 months, the longest on record, says moneysupermarket.com