The move shows the lasting effects the global credit crunch is having on lenders as they appear to view loans to be as risky as credit card debt. The bank has increased the interest on some of its loans by 1%, meaning that a £1-3,000 loan now has attached interest of 17.4%, 1.5% higher than the rate it currently charges for credit card debt. In raising its interest rates, Nationwide has followed the lead of the majority as many banks have also made the same move recently indicating the credit crunch is still having major effects on lenders.

Michelle Slade, an analyst at Moneyfacts.co.uk, said: “It's not only mortgage rates that continue to increase, so too have the rates and monthly repayments on personal loans.”

This latest increase leaves Nationwide customers potentially better off if they pay for goods by credit card, not with a loan, something which usually proves more expensive.