The cost of personal loans has increased sharply following interest rate rises with many customers now being denied standard advertised rates.

Banks and building societies have been using "personal pricing" with higher-risk customers paying more interest.

A survey of lenders and their rates, by consumer website USwitch.com, found loan rates have increased by 12 times the rise of the Bank of England base rate in the last four months.

The global credit crunch has also led to mortgage lenders refusing more high-risk applications and customers with fixed-rate deals expiring - who are facing a considerable hike in their repayments.

Yesterday, Northern Rock announced chairman Dr Matt Ridley was resigning, one month after the bank's crisis that led to customers queuing to withdraw savings. Bryan Sanderson, former chairman of Bupa and Standard Chartered Bank, will take over the post.

Consumer comparison group USwitch expressed fears the personal pricing trend for loans was preying on the most vulnerable customers and would harm competition as rates are hidden from competitors. Unlike standard rates, loans are not linked to the amount borrowed. Instead, they are based on customers' circumstances and previous credit record.

A move away from advertising standard rates has led to fears that it will adversely affect competition.

Mike Naylor, personal finance expert at USwitch.com, said: "There are already huge variations in loan rates available to consumers amongst online and offline deals. Throwing the personal pricing smoke screen into the melting pot is causing further confusion, making it a complete minefield for consumers to shop around and get the best deal.

"It is far from transparent and a perfect way for the big banks to prey on loyal customers who trust their existing bank to provide them with a competitive deal.

"There is absolutely no way of the industry knowing which rates customers are getting from each provider - which could harm competition."

The USwitch survey found 32 providers increased their rates since the Bank of England increased the base rate by 0.25% in July. Lenders are charging an average of 0.93% more for loans and some have increased by as much as 3%.

Customers who choose to arrange a loan in a branch or over the telephone are also being charged a higher rate increase than those who apply online.

Phone and branch rates had gone up by an average 1% since July, compared with just 0.2% for online customers. Online deals are now charged an average 7.7% interest, while branch deals cost 8.7%.

Earlier this week, it was reported that banks were tightening lending criteria and more people were being refused mortgages following the sub-prime market collapse in America.

It is now estimated there will be a £50bn reduction in the mortgage market this year, down to £300bn mainly because Northern Rock has cut back on lending.

Sub-prime loans and buy-to-let have suffered most as lenders are reluctant to take risks. Research by Moneyfacts.co.uk found the number of mortgage products has reduced by 40% in three months. Buy-to-let deals in the sub-prime market have been cut by 72% and residential deals are down 54%.

The mainstream market, while better, has also been affected with a 16% drop in products offered. Northern Rock has cut its product range from 230 to 70.