Cahoot, the Internet bank operated by the Abbey National, has responded to the launch of ING Direct in the UK by raising interest rates for savers and lowering rates on personal loans.
Cahoot's savings account will offer investors 4.1% AER on as little as £1 deposit, with no strings attached. Loan rates are being reduced from a typical 75 APR to 6.8%.
The revision in rates will kick in at the end of the month and are a direct response to the launch last week of ING Direct and its offer of a market-beating 4.3% AER.
Deborah Cutler, cahoot’s marketing director says: "Since cahoot launched in June 2000, we have seen dramatic changes in both the savings and loans market, with a number of new entrants and casualties along the way. Cahoot customers have grown to expect highly competitive rates from a name they can trust and the latest changes to rates reinforces this."