M& S Bank has cut the rate on loans between £5,000 and £7,499 from 7.3 per cent to 7.0 per cent.
During the last few months of 2012 and the first ten days of 2013 so far, there has been a rate war breaking out in the personal loans market but this has been confined to loans valued between £7,500 and £15,000.
The Clydesdale Bank went to the top of the best-buy tables yesterday when it usurped Tesco Bank’s 5.2 per cent deal on loans between £7,500 and £15,000 by cutting its rate to 5.1 per cent.
M&S offers a loan between £7,500 and £15,000 at a rate of 5.6 per cent.
M&S’s decision marks the first major rate cut from a personal loan provider offering borrowing at a lower amount.
Rates on personal loans below £7,500 attract a higher interest rate and M&S’s reduction should lead to cuts from other providers for loans around the £5,000 mark in the coming weeks.
A borrower can repay the loan over 12 to 60 months.
M&S is also introducing a limited loyalty points offer for existing current account and credit card customers who take out a personal loan by Wednesday 6th February.
Customers will receive 5,000 points on mid-value loans, worth £50 to spend in M&S. Customers taking out a loan between £7,500 and £15,000 will receive 10,000 points worth £100.
Colin Kersley, M&S Bank Chief Executive, said: "We're conscious of the need to reduce the cost of borrowing for our customers, so we're constantly reviewing our rates to ensure we're offering the best rates we can.
“We're also pleased to be able to extend our loyalty point offering for a limited period to include loan applications from our existing current account and credit card customers, who already enjoy loyalty points on their credit card and debit card spend."
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