Myth 1: Interest rates automatically fall when the Bank of England drops the base rate

The Bank of England sets the base rate but it’s up to lenders what they charge for the money you borrow. The credit crunch has made it more difficult and expensive for them to borrow, so they will pass some of this on to you. The risk that you won’t pay them back is also a key factor. If they can see that you’ve been a reliable borrower who repays what you owe on time and in full, you’ll probably qualify for a lower interest rate than if your credit history shows you've missed repayments or have court judgments against you for bad debts.

Ease the credit squeeze