Do you need additional insurance for your Christmas gifts?

With consumers across the UK clamouring to the shops to get their Christmas shopping sorted out, retailers are raking in the money despite the apparent slowdown in the economy and in consumer confidence.

Many retailers are also looking at ways to increase profits at the busiest time of the year, peddling everything from high interest rate store cards to costly insurance policies. Most people are aware of the dangers of store cards, which charge a fortune in interest if the balance is not repaid in full each month. But what about insurance cover on the gifts that you buy?

Most people will be familiar with the patter that sales employees give when purchasing certain items such as electrical gadgets. This is where the employee tries to persuade you to take out additional cover to get the item replaced if it breaks down or gets damaged within the first three years. However, this cover can be expensive, often coming to a third of the price of the actual item, and many retailers try and push this cover on items as cheap as a fiver, which could be easily replaced by the consumer in the event that anything happened.

However, experts are warning that even with more expensive items consumers should think carefully before shelling out on cover, as in many cases this cover may be unnecessary. Industry experts state that consumers already enjoy a high level of protection without having to take out additional cover, with the manufacturer’s warranty, credit card purchase guarantees under Section 75 of the Consumer Credit Act, and the Sale of Goods Act.

Those that do wish to benefit from additional protection on the gifts and items that they purchase over the Christmas period may fare better by looking into specialist stand alone policies that provide cover for several items rather than a specific item. In addition, consumers should remember that many of the items may be covered under their home insurance policy.

Tom Smith
10th December 2007

Co-op under fire over bank charges

The Co-operative Bank, which described itself as ‘ethical’ has come under fire after announcing a change to the way that it charges on unauthorised overdrafts.

According to experts the new charging structure that will come into force next month will not only push people into debt more quickly, but will also affect lower income customers the most. The changes are to take effect next month, and campaigners state that lower income banking customers could really bear the brunt of the changes.

The UK’s financial regulator, the Financial Services Authority, stated earlier this year that banks could temporarily put the brakes on issuing bank charge refunds until the High Court test case had taken place in January 2008. However, experts state that the new Co-operative Bank charges appear to be in violation of the FSA guidelines. This was because banks were told at that time not to make any material changes or raise overdraft fees.

The fee from the Co-operative Bank will still be capped at £100 per month, but under the new structure many customers will clock up a higher fee more quickly, reaching the £100 limit faster than they would have done over the old structure. It is estimated that close to one million customers could fall victim to this new charging structure.

An official from the Consumer Action Group stated: ‘These clever changes will hit those people who are eking out a living day by day and go over their limit just before pay-day. This happens an awful lot for people on benefits and people like young single mums, who run out of money just at the end of the month. If you are in a vulnerable group this will happen every month of your life. These changes are likely to break the camel’s back for them. The Co-op is just throwing this at them because it knows they have no mobility in their accounts and can’t go anywhere else because of their credit rating. This is an insidious charge based on the knowledge that those affected just can’t walk away.’

Tom Smith
7th December 2007

‘Tis the season to avoid store cards

As Christmas continued to get nearer and nearer experts have been warning consumers across the UK to avoid the temptation as taking out a store card, as this could lead to high levels of debt and real financial difficulties once the festive season is over.

With December upon us millions of shoppers are hitting the high streets and shopping malls to get their gift, clothes, and other Christmas goodies, and many retail staff are just waiting to pounce and talk vulnerable consumers into taking out a store card.

Store cards are fine for those that will repay their balance in full each month, thus avoiding any interest charges, but many experts state that consumers would be far better off with a rewards based credit card, as you can still avoid paying interest by repaying the balance in full each month, you can still enjoy benefits in the form of rewards, and you have the luxury of choice, as you can use the card in any shop rather than only at a specific shop.

However, the real problem is with those that do not repay their balance in full, as store cards charge very high rates of interest, and the interest that you will pay on any outstanding balance will by far exceed any rewards and discounts that you receive. Therefore those that wish to spread repayments on their Christmas spending are strongly advised to opt for a 0% purchase credit card in order to avoid paying interest rather than an expensive and restrictive store card.

One industry official stated: ‘With storecards the advice is simple: Don’t use them, avoid the gimmicks, don’t be lured in. Invariably people forget about spending on their plastic, or they use credit precisely because they know they won’t be able to repay the debt immediately. Under those circumstances there is no more expensive form of borrowing than a storecard. The discounts can be attractive, and some storecards offer 0% deals if you spend a lot of money in-store. So if you’re adamant you need a storecard, ensure you make the most of it by keeping up to speed on all the incentives on offer.’

Tom Smith
1st December 2007

Payment Protection Insurance Cover

Anyone that takes out finance likes to have the peace of mind that they are protected against situations that could render them unable to make repayments, and payment protection insurance cover is an effective way to do this. Read more

Halifax house price data contradicts Nationwide data

Recently Nationwide released data that showed house prices in the UK had picked up during the month of October, following an unexpected tumble of 0.6% during the month of September.

The news of rising house prices came as a surprise for many, particularly given industry predictions that house prices would continue to fall over the last quarter and into 2008. However, the Halifax has now released data that contradicts the information provided in the Nationwide report.

According to the Halifax house prices actually fell during the month of October, taking another tumble of 0.5% and bringing the annual rate of inflation to 8.9% for October from 10.7% in September. According to the Halifax report the average house price in the UK is now just over £197,000. If house prices have fallen for the second consecutive month this is the first time since April and May 2005 where there will have been two house price drops in a row.

In the three months to October house prices were 0.3% higher than the same time last year according to reports. The Halifax stated that its figures reflect the steady ‘downward trend’ that many analysts and industry experts have been predicting would take place over the final months of the year.

The Chief Economist at Halifax stated: “The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity.”

He added that the data signifies a cooling market but not a crash. “The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices.”

Tom Smith
15th November 2007

Younger couples could be better off renting than buying property

Industry experts have stated that younger couples on average incomes could be far better off financially renting a property in England and Wales rather than purchasing.

Although there is no investment element in renting a property it is estimated that the cost of renting an average two or three bed house in England and Wales is around two thirds the cost of a 100% mortgage, making it the more affordable option for those on average incomes.

In the past the cost of renting a home was more or less the same as taking out a mortgage to buy one, and therefore purchasing was the more sensible option. However, due to the rising value of property in England and Wales, which has rocketed over recent years, coupled with rising interest rates, which have been hiked up five times since August 2006, mortgage costs are sky high at present, and many couples and families are now turning to rental properties.

One industry professional involved in the research stated: “Not too long ago, there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying.”

Research shows that the amount of money that first time buyers now need o be earning in order to get a mortgage is higher than ever, making it increasingly difficult for younger couples and families to get onto the property ladder even with the availability of increased income multiples now offered by many mortgage lenders.

Tom Smith
5th November 2007

Abbey slated over 125% mortgage

Amidst the turmoil and chaos that has hit the financial and mortgage markets over the past month, high street bank the Abbey has announced the launch of a 125% mortgage deal for first time buyers and other property purchasers, and this move has been strongly criticized by many financial professionals.

The mortgage allows consumers to borrow over and above the value of the property, but experts state that many consumers could find themselves left in negative equity as a result of taking on these loans.

Experts state that if consumers default on the 125% mortgage they could quickly find themselves locked into negative equity, and this could be further fuelled if, as expected by many analysts, property values in the UK tumble over the coming months. The government has been urging financial institutions to be more responsible with lending in light of the current financial situation, and Abbey is now being accused of ignoring this advice.

The Abbey is offering consumers the opportunity to borrow 100% of the property value, and an additional £25,000 on top. The recent chaos with Northern Rock has increased concerns over irresponsible lending by financial institutions, and many experts are now accusing the Abbey of further fuelling the debt crisis in the UK by offering this type of mortgage in the current economic climate.

Officials from the debt charity Credit Action have commented on the availability of this 125% mortgage loan, and one official stated that the loan posed ‘real dangers’ to borrowers, adding that anyone that decided to take on this type of loan would have to be ‘incredibly bold or incredibly stupid’.

Tom Smith
24th October 2007

No interest will be charged on A&L overdrafts

Another bank has revealed its new charge structure with regards to overdrafts and bounced cheques. According to recent reports the Alliance and Leicester will now no longer be charging any interest at all on its overdrafts on current accounts.

The bank will also be reducing the charges applied for a bounced cheque, which will go down from £34 to £25. Officials from the Alliance and Leicester state that in place of interest charges on overdrafts new daily charges will come into force.

Banking will still be free for customers that keep their accounts in credit, state bank officials. The new charge structure is due to come into force around the third week of October. Some banks, such as Lloyds TSB, have already announced their plans to reduce overdraft charges and fees for bounced cheques, which many think is a direct response to the investigation into bank charges that has been carried out by the Office of Fair Trading.

However, officials from Alliance and Leicester claim that this is not the case, and that they had plans to change the fee structure prior to the investigation.

One official from the Alliance and Leicester stated: “The combination of fees and interest is unnecessarily complex when you are trying to present your business as simple.”

Under the new charge structure customers using an authorized overdraft will be charged 50p per day up to a maximum of £5 per month. If the overdraft is unauthorized then the customer will have to pay £5 per day until the account is brought back into order.

One industry professional stated: “Customers should ask themselves whether the new simplified fee structure does actually save them money in the long-term.  According to our analysis, the new way of charging will result in Alliance & Leicester customers being marginally better off.”

Tom Smith
24th October 2007

London property purchasers being hit hard by stamp duty

A recent report has highlighted just how hard property purchasers in the London area are being hit when it comes to stamp duty.

The extortionate cost of buying a property in London means that buyers have to also pay more for their stamp duty, as well as for their deposit, and it is estimated that the average upfront fee required by first time buyers in the city comes to over £20,000. This covers just the deposit and the stamp duty, and does not include additional fees such as legal costs and removal fees.

Figures indicate that London stamp duty costs have rise by over 800% in the space of just ten years, which equates to an 80% rise per year in the cost of stamp duty. With the average apartment price in London standing at around £263,000 the 3% stamp duty comes in at a shocking £8000. Coupled with the 5% deposit of just over £13,000, this brings the cost of just the deposit and stamp duty on an apartment with an average value to around £21,000.

The survey was carried out by Zoomf.com and shows the difference between the average apartment price and stamp duty costs in 1997 compared to today. In 1997, a decade ago, the average value of a flat in London was around £87,000, which meant that the stamp duty cost would have been under £900. In just ten years potential property purchasers for the London area – as well as other areas – have had to deal with rising property prices, rising stamp duty costs, increased interest rates, and increased additional costs such as legal fees.

Zoomf.com reported that it has tens of thousands of properties listed for the central London area, but only several of them fell under the £125,000 value, which is the threshold for stamp duty.

Tom Smith
20th October 2007

Is a house price crash on its way?

According to some experts in the UK there could be a housing market crash around the corner, similar to that seen in the 1990s.

The predictions come from industry professionals at the Royal Institute of Chartered Surveyors. Over the coming year expectation for house prices in the UK have been lowered by the RICS. According to one senior official from the institute the predictions are perfectly ‘legitimate’ and have not been made irresponsibly.

Over the coming year officials from RICS are predicting that there is a 20% chance that house prices will fall by 10% in the London area. In a similar housing market crash in the 1990s, house prices plummeted on average by around 35%. However, despite these predictions from RICS officials there are other industry professionals that disagree and feel that the chances of a housing market crash are very slim.

One industry expert stated that although interest rates have gone up by a total of 1.25% over the past year in
a series of 0.25% rises, there has been no sharp rise in interest rates. This, along with other factors, made the chances of a housing market crash very unlikely, he stated. Banks and building societies in the UK have been reporting a slowdown in the housing market, and independent research has indicated that both consumer interest and agreed sales have been slowing down over the past few months.

If the housing market does crash, as it did a decade ago, many could see the equity levels in their homes plummet, and for those that have recently taken out 100% loan to value mortgages this could leave them in negative equity, which means that they will owe more on their mortgage than the value of their property.

However, for first time buyers who are looking to get onto the property ladder a housing market crash could prove to be the ideal opportunity to increase affordability – recent reports have indicated that many first time buyers are taking a ‘wait and see’ stance rather than rushing into purchasing, amidst rumours that house prices will fall over the coming months.

Tom Smith
16th October 2007

Don’t bail out friends and family with loans

A debt advice agency in the UK has warned that lending money to friends and family could have an adverse effect on both the lender and the borrower.

Officials from the Debt Advice Bureau claim that it is better to offer family and friends advice and support when they run into financial problems rather than throwing money at them by way of loans. In many cases these loans are not fully repaid and can put a strain on the relationship, and often this type of action results in people becoming reliant on loans from family and friends to bail them out if they get into financial difficulties.

Officials from the Debt Advice Bureau state that consumers should help family and friends to overcome debt and finance related problems rather than encouraging them to rely on others to help them out financially, as this can simply lead to a cycle of debt, and could even lead to the borrower getting themselves into debt in order to help out the family member of friend, which can make matters even worse.

One official from the bureau said that by lending money to friends and family consumers could be making the problem worse for all concerned.

He stated: “You don’t want to be laying the groundwork that every time they have a slight cashflow problem, you come to the rescue.”

Official figures show that in many cases the money that is lent to friends and family members is not received back in full, and in some cases is not repaid at all.

According to the results of a recent survey, only around 58% of 70% of consumers that had loaned money to family member had been fully repaid. Of the 59% that had lent money to a friend only 27% had been fully repaid. 

Tom Smith
6th October 2007

Worries over interest rates from 40% of consumers

According to a recent report around 40% of consumers in the UK are concerned about further rises in interest rates, with many already having been hit hard by rising repayments on their variable rate mortgage.

Interest rates have already risen five times since last August with a rise of 0.25% each time, taking the base rate from 4.5% last August to 5.75%, and reflecting a total rise of 1.25% within the period of a year.

Although inflation has come down to within the government’s target of 2% recently, many consumers fear that the next Monetary Policy Committee meeting will result in yet another interest rate rise, which could make matters even worse for those that are already struggling to keep up with repayments.

The rising interest rates have affected many financial areas, including resulting in an increase in repossessions as the result of many consumers being unable to keep up with repayments on their mortgages. Fixed rate mortgages have been taken up by many consumers to try and combat the problem of rising interest rates, and the Council of Mortgage Lenders stated that a record number of fixed rate mortgages were taken out in June of this year.

The recent survey was carried out by Intelligent Finance. According to the research four out of every ten consumers are very concerned about a further rise in interest rates, as they feel that they are not covered or prepared for yet another rise in repayments. Officials from Intelligent Finance state that consumers must take preventative action to try and ease the pressure of another interest rate rise by tightening the purse strings where necessary, and making every penny count.

One official from Intelligent Finance stated: “With interest rates on the rise and purse strings tightening, it’s important to make every penny work as hard as possible.”

Tom Smith
6th October 2007

London Leads The Way On House Prices Again

The Land Registry’s latest House Price Index suggests that the average price of a property in England and Wales was £181,039 in June 2007. That is a 0.4% increase for the month (slightly less than the May), and the annual house price inflation rate is now at 9.1%.

It is prices in London that once again have driven the price growth. For the third consecutive month London’s rate of increase was more than 6% a year higher than the rate for England and Wales overall, and the difference is at its greatest since early 2005, but at that time it was London that was behind the rest of the country by 6%. The average house price in London in June 2007 was £338,950.

Average property prices across England and Wales for detached house were £271,530 in June 2007, up 7.5% from their level of £252,573 a year before. Flats and maisonettes showed the greatest increase on the previous June at 9.7%, increasing from £154,838 to £169,874 on average. For semi-detached properties the rise was 8.7% from £157,244 to £170,952, and for terraced houses the rise was 9.3% from £129,246 to £141,278.

All regions saw increases in their average prices over the last 12 months. The highest annual increase was in London at 15.8% – 1.5% on the month. The next highest annual increase was in the South East 1t 9.1%, although the region experienced a 0.3% decrease in prices during the month. The highest monthly change behind London was in the West Midlands at 1.2%, and an annual increase of 7.1%. The biggest loss in the month was in Wales at 1.1%, although its annual change was still an increase of 6.6%. The smallest annual rise was in the East Midlands at 5.5%, with a monthly fall of 0.6%. All in all half (five of ten) regions showed a decrease in average prices during the month.

In terms of county and unitary authorities Brighton and Hove saw the greatest annual price change with a rise of 16.3%. There were 25 areas in total that experiences an annual price increase in double digits. There were no county or unitary authorities that saw an annual price fall to June 2007. Strongest monthly growth was seen by Rutland at 2.5%, whereas Powys saw the highest fall of 2.4%. Behind London, Windsor and Maidenhead has the highest average prices at £327,345. Lowest prices were to be found in Merthyr Tydfil at £81,697.

The metropolitan district with the biggest annual increase in average prices was Manchester at 11.7%. Bury saw the highest monthly increase of 1.7%. The lowest annual rate of house price growth was in Salford, with growth of 2.8%. The district with the largest fall in house prices for the month was Barnsley with a fall of 0.6%. In Metropolitan districts Solihull had the highest average prices at £210,139, and the lowest average prices were in Oldham, at £106,971.

In London, the borough with the fastest rate of growth was Kensington and Chelsea, up by 25.7% for the year. The same borough had the highest monthly growth at 2.2%. Newham saw the lowest annual growth of only 6.3%, and Barking and Dagenham saw a monthly fall of 0.1%.

In the first four months of 2007, the number of house sales averaged 87,734 per month, representing an increase from the same period last year when sales volumes averaged 87,559.

Tom Smith

Bank to waive mortgage fees until end of September

One of the UK’s leading high street banks, HSBC, has announced earlier this month that it plans to waiver all mortgage fees for new and existing customers until the end of September.

The bank has already agreed that it will be axing mortgage exit fees, as have many other lenders, following a call for action from UK regulators and campaigners who stated that mortgage exit fees has rocketed for no apparent reason over the past few years.

According to reports the mortgages offered by HSBC will be totally fee free for existing and new customers until the end of September. However, the bank is offering its best rates as mortgage specials, and for these customers will still need to pay arrangement fees. According to some officials, the bank has set rates higher than many of its competitors, and this, along with the arrangement fee charged on the best deals, could mean that customers could still be better off going elsewhere despite the fee free offer.

One official from HSBC stated: ‘With some lenders recently bowing to pressure to scrap their exit fees, HSBC has decided to stay one step ahead by removing all fees on its standard mortgage range until the end of September. This will enhance HSBC’s reputation for providing transparently priced mortgages which offer real long-term value. Sadly some lenders will simply look to rename their exit charge or bump up fees elsewhere, however HSBC customers can rest assured, the rate they see is all they will pay.’

The bank does offer a range of mortgages, but consumers are urged to do some research and compare rates from other lenders, as even if they have to pay a fee with another lender it could still work out cheaper due to the lower rates of interest offered.

Tom Smith
28th September 2007

Pet insurance could save you a fortune

According to a major UK pet insurance company having some form of pet insurance in place could help some pet owners to save a fortune on the cost of caring for their beloved pets over the course of their lifetime.

Britain is known to be a nation of animal lovers, and most pet owners want the best for their pets, particularly when it comes to their health. However, those with no form of insurance cover in place could face crippling costs or a heartbreaking decision if their pet is injured or falls ill and required surgery or expensive treatment.

According to the UK pet insurance specialists Petplan, a dog, with a typical lifespan of twelve years, could cost around £14,750 over its lifetime, and a cat, with a typical lifespan of sixteen years, could cost around £14,230. The insurance company goes on to state that the rising cost of veterinary consultations and treatments is why many decide to take out pet insurance cover, and for many this acts as a real life saver – literally in some cases – when their pets need surgery or treatments following accidents, injuries, and illness.

Figures indicate that there are many more claims made on pet insurance each year in the UK compared to other types of insurance cover. Around 34% of pet insurance policyholders make a claim each year compared with around 9% of other types of insurance policyholders. However, it is important for pet owners to ensure that the cover that they take out is comprehensive and will provide them with the necessary protection for their pet.

Premiums can vary based upon the type of pet, its health and medical history, and its age, so consumers are urged to shop around and check the cost of cover as well as the level of protection provided.

Tom Smith
27th September 2007

Related links:

• Insurance : Do You Care More About Your Pet Than Yourself?
• How Do Insurance Companies Work Out Premiums?

Nationwide stops PPI sales

The largest building society in Britain, the Nationwide, has stopped sales of Payment Protection Insurance with its financial products, after admitting that customers were not being properly advised with regards to PPI by staff members.

Payment Protection Insurance has been at the centre of controversy for some months after it was found that customers were being pushed into purchasing this non-compulsory cover, and that the cover was often being mis-sold inappropriately so that customers ended up purchasing a costly policy that they would never be able to benefit from.

The Financial Services Authority has been running a long term investigation into the sales of Payment Protection Insurance for two years, and is in the final phase of its review and investigation. The cover is designed to assist those that cannot keep up with repayments on their financial commitments due to accidents, illness, or redundancy, and is sold with products such as credit cards, loans, and other financial products that may need protection.

However, the review revealed that in many cases sales staff were mis-selling this policies, making the customer think that they cover was compulsory, and in some cases even adding PPI without the customers’ knowledge. This has led to a real crackdown on the sales of PPI after many people ended up purchasing policies that they were either not eligible to claim benefits on or that they were not even aware that they had purchased.

A Nationwide spokesman stated that the halt in sales of PPI is a temporary one, adding: ‘We did some mystery shopping and weren’t satisfied the sales processes were as robust as they should be, so they have been halted temporarily.’

Tom Smith
27th September 2007

Has the housing market peaked?

According to recent figures the housing market in the UK may have peaked, as July’s figures show that the number of people looking to purchase their first home fell at the fastest rate in a period of three years.

Inquiries from first time buyers fell at the fastest pace since August 2004 according to the Royal Institute of Chartered Surveyors, with number of unsold properties rising to its highest in the past eight months, all of which points towards the housing market in the UK having peaked.

According to officials the reason for the slump in inquiries from first time buyers is due to the series of interest rate rises, and more importantly due to the added threat of further interest rate rises. The Bank of England has already hiked rates up five times by 0.25% each time since last August, and many predict a further interest rate rise of 0.25% in the coming months, which would take the base rate up to 6%. The interest rate is already at its highest in the past six years.

Officials state that many first time buyers are taking a ‘wait and see’ stance, and are continuing to rent for a while whilst they assess the market and see what happens with the interest rates in the coming months. However, although demand seems to have fallen according to these figures, house prices in the UK rose yet again for the 21st consecutive month.

An official from the Royal Institute of Chartered Surveyors stated: ‘The combination of softening demand and supply is causing market conditions to weaken further. Buyer activity has pulled back a little over fears that we may have seen the top of the market. With interest rates perched at 5.75% and a jump to 6% a strong possibility, aspiring first-time-buyers are continuing to rent until the market trend becomes clearer.’

Tom Smith
27th September 2007

Overdraft warnings will be displayed to HSBC customers

In a recent announcement the HSBC bank has revealed that its customers will now receive a warning if they try and withdraw money from one of its cash machines and the withdrawal could take them over their overdraft limit.

The machines will display the warning to customers that risk going overdrawn as the result of taking out the cash, which will offer additional protection and help to safeguard the customers from being hit by expensive bank charges.

The bank has warned that this facility will only be available to its own customers and not to customers of other banks that are using the cash machines, and this is because the bank has no access to the overdraft details of customers of other banks even if they are using HSBC cash machines. Over 3500 machines will have the facility to display this message, and the scheme is due to come into force at the beginning of October.

Although the precise wording that will appear to customers has not yet been confirmed HSBC officials state that this will help to make its charges more transparent and help customers to avoid having to pay the charged at all by enabling them to stay within their limits. The bank has also stated that if unauthorised borrowing amounts to under £10 per day no charge will be made. This will also be the case if money is paid back into the account by the end of the day to cover the amount of the money withdrawn or if the customer has not exceeded his or her limit in the past six months prior to going over the limit.

One HSBC official stated: “More than 95% of HSBC cash withdrawals are now made at ATMs and while you can already check your account balance before you make a withdrawal, few people do. We believe that alerting customers at this point will enable them to make an informed choice about whether to proceed.”

Tom Smith
20th September 2007

Flooding costs to affect insurance premiums

The UK has seen some of the worst rain and floods in years over the past few weeks, and for many this has resulted in severe damage to their property and huge insurance claims.

Many insurance companies have been inundated with claims following the flood damage, and millions of pounds worth of claims have had to be processed and paid out. Insurance companies have stated that the level of claims coming in has been high and the payouts have made a big dent.

The recent flooding is said to have been the worst in the UK for around sixty years, with many households devastated by the damage caused. A number of leading insurance companies are now stating that they will have to push the cost of premiums up because of the level of claims that have had to be paid out as a result of the flood damage. Both contents and buildings insurance cover is now expected to rise as a result of the situation.

One of the leading insurance companies in the UK, Norwich Union, has confirmed that its premiums will be going up. From next week those taking out cover with the insurance giant can expect to pay around 10% more than previously. All customers will be affected by this price increase and not just those that were hit by flood damage and had to therefore make a claim on their policies.

One insurance company official stated: “People are spending more on home improvements. When things go wrong they’ve got flat-screen televisions and expensive flooring. So, when the do damage, it’s costing us more.”

An official from Direct Line insurance stated: “We do recognise that premiums will rise, and that goes for all RBS brands.”

Tom Smith
19th September 2007

Consumers still failing to get best rates on their savings

According to a recent study many consumers in the UK are still failing to make the most of their savings by finding an account that pays a competitive interest rate.

The news comes despite the five interest rate rises that have been applied to the base rate by the Bank of England over the past year, taking the base rate from 4.5% to 5.75%. Experts state that consumer apathy is resulting in many savers losing out on significant amounts of interest each year.

Many banks have come under fire over the past year for failing to apply interest rate rises in full, or at all in some cases, to their savings accounts. Even those that do pass the rate rises on have been under fire for taking their time to do this, whilst moving much more quickly when it comes to applying the rate rise to borrowing.

Although many savings accounts have let their interest rates stagnate, and some pay very low rates of interest, there are also some account that have passed on all interest rate rises in full, and are now paying above and beyond the base rate.

Amongst the savings account that are now paying well over 6% in interest to savers are ICICI, Sainsbury’s online savings account, and IceSave. However, despite the availability of higher rate savings account research shows that many consumers are allowing their savings to snooze in low rate account where they are earning very little in interest.

Many consumers don’t bother to research higher interest rate alternatives, and some simply feel that they don’t have the time to switch. However, for many – particularly those with substantial savings – switching to a higher rate account could mean a significant difference in the amount of interest earned.

One industry professional stated: “I guess it’s just clients are looking for reliability and consistency; they don’t always want to be chopping and changing their bank accounts. So I think people are aware of it, it’s just a matter of priority. You don’t want to be changing your bank account every couple of months.”

Tom Smith
28th August 2007

Is international medical insurance something that you need?

Most people in the UK are well aware of the benefits of having medical insurance, and many enjoy peace of mind thanks to the protection that this type of cover provides for them and their loved ones.

However, the needs of consumers looking for medical insurance cover have changed over recent years according to some industry experts, and this has also impacted on the type of cover that medical insurance companies are now able to offer to consumers.

Recent reports suggest that more and more consumers in the UK are opting to go abroad on a long term or even a permanent basis, with many deciding to head abroad to enjoy their retirement. Some younger people decide to head off abroad to enjoy some travelling experience and even to live and work abroad for a while. Many others travel abroad on a regular basis as a result of their work or business, again often spending extended periods of time in another country.

As a result of these lifestyle changes an increasing number of medical insurance firms are now offering international cover according to recent research, enabling those that intend to live or move abroad, or spend longer periods of time abroad, to enjoy the peace of mind of having cover even when they are away from home.

One industry professional stated: “We have done research that shows that the number of internationally mobile employees will continue to grow over the next five years. Add to this an extra 2.3 million Brits who are set to retire abroad and by 2020, and one in five older people who will be living outside the UK. So, naturally the number of companies providing international medical insurance has increased.”

Tom Smith
27th August 2007

Future demand for buy to let mortgages could fall

According to a recent report the demand for buy to let mortgages could fall in the future, as a slow down in the rise of property values hits, lumbering landlords with higher mortgage repayments but lower house value inflation and rental income.

However, reports have also indicated that at present landlords are doing very well, and in the past year enjoyed returns of around 13%. Reports indicate that landlords saw the property vales rise on average by around 7.3% and saw rental returns of around 5.5% of the property value.

The figures come from a report issued by Birmingham Midshires. The report indicated that although the 13% property value rise seen was up from the previous twelve months of 11.9% rental payments dropped from 5.7% in the previous twelve months to 5.5% last year. Birmingham Midshires warned that the interest rate rises had led to mortgage repayments being higher than rental payments, and that this could have a dampening effect on the popularity and take up of buy to let mortgages.

One economist from the building society stated: ‘While house price growth in the sector is expected to be more subdued near-term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors. There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.’

Along with homeowners buy to let landlords are likely to be hit hard by the interest rate rises that have been applied by the Bank of England over the past year, as it means higher repayments on the mortgage without higher rental income.

Tom Smith
1st August 2007

Is fixing your bills a good idea in light of interest rate rises?

The recent interest rate rises enforced by the Bank of England have hit many homeowners really hard, leaving them with very little in the way of finances due to rising repayments. In light of these rises, many people are now wondering whether it might be a good idea to fix not only their mortgage but also other payments as well in order to benefit from increased financial stability.

Interest rates have gone up five times in the past year, with rises of 0.25% each time, and each of these rate rises has added a significant amount to the repayments of many homeowners, pushing many into the red. With these increased repayments along with the threat of further interest rate rises some experts feel that fixing as many payment as possible, including a mortgage, could prove beneficial in terms of financial management, although others feel that this could prove costly in the long run, particularly when interest rates start to fall again.

One industry expert stated: ‘Having certainty of monthly outgoings is worth its weight in gold, especially for people who are stretching themselves to take out the loan. People have been buying two year fixes, but with arrangement fees and other costs so high, we are now seeing more three and five-year fixes being taken out to avoid paying these fees so regularly.’

Another stated: ‘Fixed rates are going up as lenders factor in possible future base rate rises. Trackers are cheaper, but you have to accept that the rates are likely to go up before coming down, so you have to make sure you can afford higher monthly payments. The rates for three and five-year fixes are quite similar, so the key is to do your homework to get the best deal and make sure you are clear how long you want the fix to last for.’

Tom Smith
1st August 2007

Further disappointment for ING Direct customers

ING Direct customers are facing increased disappointment when it comes to their savings, with ING once again failing to pass on the interest rate rise that was applied by the Bank of England.

The online savings account from ING Direct now pays 5% to savers, which is well below the best rate savings account and stands at 0.75% less than the base interest rate. The account initially attracted over a million customers when it advertised its impressive interest rates in 2003, but since then ING has come under fire for leaving interest rates to stagnate despite a series of rate rises.

The Websaver account from ING will also see interest rates remain static, at 5.5%. The rate on this savings account was actually higher than this initially, opening at 5.65%, but was cur to 5.5% before the interest rate rise in May of this year. Since this time the interest rate has not gone up, despite Bank of England rises of 0.25% in both May and July. ING Direct was hugely popular amongst savers previously, but has lately received a great deal of negative press over its refusal to pass on interest rate rises.

According to recent figures customers of ING Direct have taken over £3 billion worth of savings from their accounts and placed the money with other banks as a result of poor interest rates based on the current base rate. Although interest rates in the UK have gone from 4.5% to 5.75% in the past year through a series of five interest rate rises, the interest rate on the ING Direct savings account has risen by only 0.5% in this time.

According to ING Direct other banks get around this by offering lower rates on other accounts. One official stated: ‘If these savings providers had to pay all of their customers our 5% it would cost them a fortune and they wouldn’t be able to afford to keep offering their headline grabbing accounts.’

Tom Smith
26th July 2007

Flood claims could hit £1 billion

According to industry professionals the cost of flood related insurance claims in the UK could top the £1 billion marks, after thousands of people were left to deal with the horrific damage caused by the torrential rain and storms over the past week or so.

Many areas of the UK have been particularly hard hit by the weather, with consumers suffering the misery of seeing their homes and belongings wrecked as a result of serious flooding. With more bad weather to come it is thought that the estimated cost of claims could still keep on rising.

The average claim for flood related damage in the UK is likely to be between £15,000 and £20,000 according to analysts, and with thousands of people submitting claims for such high amount, insurance companies are going to have to deal with huge payouts.

Ultimately, this is likely to push up the cost of insurance premiums for the future state some experts, which means that all consumers with home insurance will end up suffering financially.

Another factor that claimants should take into account apart from the rise in premiums is that the time taken to process their claims is likely to be far longer than normal simply due to the sheer level of claims currently pouring into insurance offices.

The Association of British Insurers has been offering advice on its website for those affected by flood damage to enable them to make their claim as quickly as possible. One ABI official stated: ‘If you have been affected by flooding, contact your insurance company. Their priority is to deal with all claims as quickly as possible.’

Each year there are, on average, just over 13,500 claims to insurance companies as a result of flooding. However, last week there were nearly 9,000 claims made in one day alone according to report estimations.

Tom Smith
13th July 2007

Insurance claims expected to flood due to flooding

The recent wet weather in Britain has devastated many homeowners all around the country, causing millions of pounds worth of damage collectively and causing untold stress and inconvenience.

According to officials the level of insurance claims is set to soar as homeowners assess the level of damage that the flooding has caused. This June has been reported as the wettest on record, and many areas throughout the country have suffered huge levels of damage.

A spokesman from the Association of British Insurers: ‘These events highlight just how important insurance protection is. If you have been affected by flooding, contact your insurance company. Their priority is to deal with all claims as quickly as possible.’

The Association of British Insurers has called upon the government to increase the funding for its defenses against flooding.

In the meantime, many of those without insurance cover or with inadequate levels of cover will be suffering the financial costs of the flooding, as they will have to foot the bill for the damages caused by the weather themselves, which could costs thousands upon thousands of pounds.

Even those with insurance cover have to now go through the laborious task of assessing the damage and making a claim with their insurer, which could take time to sort out given the number of claims that are likely to be flooding in.

More unpredictable weather is expected over the next few weeks, and this means that the number of claims being made could rise, which could mean further costs to insurance companies and a higher level of claims from customers. 

Tom Smith
10th July 2007

Cost of comprehensive car cover at its highest in two years

According to recent reports those purchasing comprehensive vehicle insurance on the direct market are having to pay the most expensive premiums for two years.

The research was carried out by Experian, and indicates that in May of this year comprehensive vehicle insurance premiums rose by nearly 8 percent compared to the same period in 2006. There are a number of factors that can affect the cost of premiums, including age, past driving convictions and claims, and the make and model of the vehicle being insured.

The research also indicates that consumers could find it cheaper to get comprehensive cover on the intermediary market rather than through the direct market.

Even policies from the intermediary market are at their highest in nearly a year for those looking for comprehensive cover, but these are still likely to be a fair amount cheaper than direct market policies, with the average cost for a comprehensive policy in May of this year coming in at £530 compared to £560 through the direct market.

The report also showed that the cost of third party, fire, and theft cover was higher in both direct and intermediary markets, and it is thought that one of the reasons for this is because this type of policy is typically taken out by younger drivers due to affordability of comprehensive cover, which pushes up the cost of premiums.

Those looking for car insurance cover in either market are advised to shop around, as the cost of cover can vary quite widely from one insurer to another. This can be done through a price comparison website as well as by searching through individual insurers online, although the latter is likely to take more time.

Tom Smith
7th July 2007

Variable rate borrowers could be heading for a fall

Industry professionals are warning consumers that they could be heading for a fall if they have high levels of variable rate debts, from mortgages and secured loans to credit cards.

With four interest rate rises over the past year the Bank of England base rate has gone from 4.5 percent to 5.5 percent between last August and this May, and further interest rate rises have been predicted by experts before the year is out.

Many borrowers with variable rate loans and cards have seen their interest rates rise, and for many this has resulted in real financial difficulties when it comes to making repayments. Many consumers seem to have been banking on interest rates remaining stable in order to comfortably afford repayments on their borrowing, and the four interest rate rises since last August have really taken their toll.

The Governor of the Bank of England stated: ‘Anyone who borrows at a variable rate should recognise that the interest rate they will pay in the future may vary. It is unwise to borrow so much that the repayments are affordable only if interest rates remain at their initial levels.’

To many, this is something of a warning that further interest rates are indeed on the way, and those planning to take on more debt should be very careful as they may not be able to afford repayments should the interest rates continue to rise.

One economist stated: ‘Rates are going to go higher. A base rate of 6% is not necessarily the top. Borrowers should brace themselves for another increase. I would be surprised if base rate hit 7%, but not if it reached 6.5%.’

An official from the London School of Economics stated: ‘Base rate will peak towards the end of the year at or close to 6%. As long as inflation is under control, it could come down in a couple of years.’

Tom Smith
7th July 2007

How Do Insurance Companies Work Out Premiums?

The winning number is…

As you wait for the insurance sales person on the other end of the phone or over the counter to come back to you with how much your insurance premium is going to be it’s rather like entering an unfortunate lottery. Quite how they work out the cost of insurance sometimes seems like anybody’s guess. Read more

Government to crackdown on insurance cover from travel agents

According to a recent report the government in the UK plans to crackdown on travel insurance cover purchased from travel agents in a bid to provide consumers with higher levels of protection when they purchase this insurance.

The government has announced plans to regulate the sector, and this means that travellers could look forward to increased levels of protection when they purchase their travel cover from travel agents.

The government has announced that the Financial Services Authority will now be regulating travel insurance sold alongside holidays by travel agents. Travel agents that plan to sell this type of insurance with holidays will therefore have to make sure that it is designed to fit the needs of customers.

Customers will have to be treated fairly in line with Financial Services Authority regulations when buying these policies, and in the even that the customer of dissatisfied with an aspect of the sale of the policy he or she can go through the Financial Ombudsman Service.

Ed Balls, economic secretary to the Treasury, stated: ‘Evidence shows that companies regulated by the FSA are better at getting consumers to make an informed choice because they are better at explaining the key features and exclusions of the product and guiding the customer through the sales process.’

The crackdown results from complaints from consumers groups with regards to unsuitable and expensive policies being sold to customers in the past – a problem that this move will help to reduce. The new regulations are set to come into force in 2009, although many officials from the travel agents industry are not happy about the move.

The travel agency industry had asked for the opportunity to make changes without these new regulations being put in place, but were not granted this opportunity.

Tom Smith
4th July 2007

Some people may never own their own home

According to recent reports future homebuyers could face house prices that are up to ten times the amount of their salaries, which means that many of today’s younger people could face the prospect of never being able to purchase their own home.

The research from the government backed National Housing and Planning Advice Unit (NHPAU) indicates that in order to avoid this situation many more homes will have to be build, otherwise millions of people will be left out in the cold when it comes to home ownership in the UK.

According to the research over a third of those that do not own their own home at the moment are doubtful that they will ever be able to afford to buy their own home. Another 20% of non-homeowners believe that they will have to wait a minimum of five years before they can afford to consider getting onto the property ladder. The purpose of the government run National Housing and Planning Advice Unit is to offer advice on improving affordability in the housing market.

The figures indicate that just seven years ago the average house prices was around four times the average salary of the consumers. However, with prices set to rise to ten times the average salary future generations face a very bleak future when it comes to the possibility of home ownership.

According to the chairman of the NHPAU: ‘First-time buyers have seen a big rise in the deposit needed to buy a home and the amount of their income spent on mortgages. Demand for housing is growing and unless action is taken, pressure on the market will only get worse.’

Tom Smith
4th July 2007

Are insurance company customers happy?

Insurance companies have been under fire for various reasons over recent months, and many have expressed dissatisfaction with their insurance provider.

However, it is increasingly difficult to determine just how unhappy customer actually are with their insurance providers because many providers now refuse to provide information on their customer satisfaction levels, making it difficult to determine how effective their services are.

According to recent reports around fifty percent of the leading insurance companies in the UK will not provide information relating to how satisfied or dissatisfied their customers are.

However, these companies had already agreed to provide the results as part of a survey that was being carried out by Association of British Insurers. The nationwide survey was designed to evaluate customer satisfaction levels within the insurance industry.

Amongst the insurance companies that have refused to provide these details so that their customer satisfaction levels can be compared to rival insurance companies are Norwich Union, Standard Life, and Friends Provident.

The customer satisfaction survey was designed to try and improve services within the insurance sector. Around 85 percent of insurance companies in the UK signed up to the survey, but despite their agreement many have not provided the necessary details relating to customer satisfaction levels.

A Friends Provident spokesperson stated: ‘We do not believe it is helpful to look at the highlevel results in any sort of league table form as we recognise that there are many reasons why results can vary.’

A spokesman for Zurich Insurance stated: ‘The results are intended to help companies understand their progress against commitments they have made. They are not intended as an accurate measure of benchmarking.’

An official from consumer group Which? said: ‘We think results for each company should be published in a standardised way with individual firms’ scores disclosed.’

Tom Smith
3rd July 2007

Banks may be acting illegally over bank charges

Over recent months there has been a battle raging between banks, campaigners, and consumers, with the banks standing firmly on one side, and consumers and campaigners fighting in unity on the other side with regards to unfair bank charges.

Campaigners have been urging consumes to fight back against the banks and reclaim bank charges that were deemed unlawful and unfair by UK financial regulators last year, and many consumers have already done this, with some receiving thousands in backdated charges that go back up to six years.

However, although the banks have been paying up, albeit with some pressure in some cases, this is something they have been doing reluctantly. And in the latest move to try and put consumers off from making claims for the refund of charges, banks have been sending out threatening letters.

According to recent reports some banks have been contacting customers that have already been awarded refunds on their banks charges, and have been informing them that if they try to claim again in the future their bank accounts may be closed. However, officials claim that this is a move that could be classed as illegal.

The Royal Bank of Scotland has sent out letters of this nature, and the letter reads: ‘Any charges that properly accrue in the future will be applied to your account in line with our published tariff and in accordance with your agreement with the bank. Should you be unwilling to accept any such charges, then we may need to consider if we are prepared to continue to provide you with your existing banking facilities. Instead, we may offer you a simple account that does not offer borrowing facilities or other services that can result in charges.’

A spokesman for RBS stated: ‘If a customer is unwilling or unable to pay the charges for the services we provide or is considered a particular credit risk, then it is wholly appropriate for us to consider whether their existing account is best suited to their needs. As a responsible lender it may be appropriate to provide them with a more suitable account.’

Tom Smith
1st July 2007

Bank charge court claims need to be watertight

Experts have warned that consumers that are trying to reclaim bank charges from their banks through the courts need to make sure that the case they are putting forward is solid and watertight in order to increase their chances of successfully reclaiming back the cash from the bank.

Apparently a number of claimants are failing to provide the right documentation or are failing to put forward their case properly, and this can increase the chances of the judge ruling in the bank’s favour.

Judges are becoming impatient with these cases, as there are many pending and blocking up the court system, and banks fail to turn up to defend themselves, which means that the claimant wins the case by default.

Experts claim that judges are now looking to get rid of what they describe as frivolous claims, and this could affect those that do not put forward a strong enough case or provide the necessary paperwork and documentation to support their claim.

Lloyds TSB has already won two cases, where the judges ruled in the bank’s favour rather than that of the claimant. A judge in Hull has also stated that he may strike out twenty claims against banks. Experts think that all of these lost of struck out cases could be the result of sloppily put together cases and inappropriate or inadequate documentation from the claimant.

Thousands of consumers have been claiming back charges from their banks going back up to six years, and these charges were applied for exceeding the overdraft limit on the account, as well as for returned direct debits and cheques. However, where banks have reduced to repay the full amount many have decided to file a small claim against the bank through the courts.

Tom Smith
30th June 2007

Mortgage bills set to soar for former fixed rate customers

Recent reports indicate that a million mortgage payers in the UK could soon see their mortgage repayments shoot up by over thirty percent in some cases, as their fixed rate deal comes to its end.

It is thought that consumers that took out a fixed rate deal several years ago for two or three years are going to have a shock, as their mortgage repayments soar to hundreds of pounds more per month as a result of the four interest rate rises enforced by the Bank of England over the past year.

Many consumers took out low rate fixed rate mortgages a few years ago, but these are now set to come to the end of their term, which means that those mortgage holders now have to face the financial pinch of all four interest rate rises in one fell swoop.

Although consumers could switch to another fixed rate deal once their previous one expires, it will be at a much higher rate than their previous one, which means that they will still have to pay out a small fortune each month in additional repayments.

Some industry professionals feel that the million or so people that are set to see their repayments soar over the next year may find it a real struggle to cope because of the amount by which their repayments will rise. It is likely that these customer took out a fixed rate at around 4.5 percent a couple of years ago, and the most favourable rates on fixed rate mortgages now are around 5.5 percent. And with interest rates set to rise again in the coming months this could rise yet again.

One banking analyst stated: ‘For some customers we see a 25-30% increase in interest payments.’

He also stated that those people that had to struggle with repayments in order to get onto the property ladder may now find that repayments are totally unmanageable because of the number of interest rate rises that have been applied since they took out their initial loan.

Tom Smith
19th June 2007

HSBC may be confusing customers over withdrawal fees abroad

With the summertime fast approaching many people in the UK are getting ready to jet off abroad to enjoy a relaxing holiday, and most will go armed with their debit cards in case they need to withdraw any cash when they get to their destination.

For consumers who have a packaged current account with HSBC the news appeared to be good, as HSBC has been boasting that these customers can enjoy using their debit cards at cash machines abroad without facing any withdrawal fees. However, although this makes it appear that the transaction will be totally free of any charges this is not actually the case.

HSBC do waiver the withdrawal fee for customers that have a packaged current account, which is basically a premium account that offers a range of benefits but costs the customer fourteen pounds a month. Being able to make fee free cash withdrawals at cash points abroad with a debit card is one of the benefits offered to these account holders. However, what many consumers fail to realize is that a loading fee of 2.75 percent is added to the foreign currency exchange rate.

According to campaigns and advertisements from HSBC: ‘Withdrawals from Cirrus/Maestro ATMs worldwide, free from HSBC transaction fees’ and ‘Cash withdrawals from ATMs worldwide are free from HSBC charges’.

However, viewers that look at the foot of the advertisement will see the small print relating to the loading fee, which means that these transactions will not be free of charge because of the increased foreign currency exchange rate.

An official from HSBC stated: ‘The 2.75% loading is not a fee. It’s part of how we calculate our exchange rate. We don’t believe we have misled our customers.’

However, Nationwide, which is one bank that does not charge any loading fee or additional charges is looking into the claims made by HSBC.

Tom Smith
12th June 2007

What the recent interest rate rise means for your mortgage repayments

On 11th May the Bank of England increased its rates by another 0.25% to 5.5%, meaning that six million homeowners in Britain will face bigger monthly payments for their mortgages. Read more

You could get a better deal with annual travel insurance

According to officials from MoneyExpert buying annual travel insurance cover could work out cheaper than opting for single trip cover, although experts do warn that consumers need to carefully check the policies to see what is and isn’t covered before making any commitment.

According to researchers from MoneyExpert some annual travel insurance policies can work out cheaper than single trip policies, but consumers must check that they are adequately covered.

One MoneyExpert official stated: “Holiday makers often think that single trip cover is simple and cheap, but the truth is it’s often not best value for money. You are certainly paying for a quick fix. As with all insurance, the quality of cover will always vary so like-for-like comparisons are quite difficult to make. Nevertheless it remains the case that you can get annual travel insurance for the whole family without breaking the bank. Focusing on price alone can mean holidaymakers will be left with insurance that is not worth the price. Insurance policies are only tested when you need to make a claim. You don’t want to find out when you are making a claim that you’ve saved money at your expense.”

MoneyExpert officials have warned that although it can be cheaper to take out annual cover, consumers should take into consideration the quality of the cover as well as the price. It is important to ensure that you compare different policies, and know exactly what you are and are not covered for in order to ensure that you get proper value for money with your travel insurance policy.

According to Sean Gardner from MoneyExpert: “Average prices provide a guide as to what to look for. It is then up to holidaymakers to probe a little deeper to find the policy that suits them best.”

Tom Smith
26th May 2007

Consumers could accrue bank charges over the Christmas and New Year period

According to recent data released by the consumer group Which? a large percentage of consumers in the UK could be at risk of accruing hefty bank charges by using their overdraft facilities to fund the expense of the Christmas and New Year period. Read more

Choose credit cards over store cards this Christmas

If you are planning to spread the cost of Christmas and the New Year there are a number of options available to you. For many people, particularly those lured into shops when the January sales come around, the temptation to take out a store card is irresistible, with retail employees throwing what sounds like offers in to encourage the consumers to apply for the store card. However, consumers should think carefully about whether a store card is worth it before making a commitment and spending money on such cards.

A store card can only be used in one shop or a certain chain of stores, and is therefore of no use to you if you want to pay for other items in other shops and stores. Store cards also typically have very high interest rates, so even though you might be offered a small discount on your purchases for using the store card you will more than make up for this in terms of the interest that you will pay for the privilege of using the card. With stores cards you don’t get special offers such as interest free periods, so you will be stuck with paying interest on any balance that you have on the card.

A more sensible solution for those planning to splurge out in the January sales is to get hold of a good credit card in plenty of time – one that offers an interest free period on purchases giving you time to repay the balance without having to pay interest. Even if you end up with a credit card that does not offer an interest free period, or where the interest free period expires before the balance has been repaid, you will still pay a lower interest rate than most store cards charge, and you have the added advantage of being able to use the card in other stores.

There are some advantages to taking out a store card, such as discounts on certain lines and products, but in order to really benefit from this type of deal you need to be the type of consumer that pays off the full balance on the store card each month, thus avoiding the extortionate interest charges that will otherwise be incurred. 

Put credit card fraud into perspective

As Christmas approaches many consumers in the UK have started to worry about the risk of Internet fraud, and although buying gifts and other related items online has become hugely popular over the years many are still worried about the possibility of becoming the victims of credit card fraud. This worry is further reinforced through the various warnings that always come out at around this time of year, warning consumers to beware of credit card fraudsters.

However, some new advice has now been issued by a company that works to protect both retailers and consumers from this type of crime. The 3rd Man has advised consumers not to listen to ‘scaremongers’, and has urged retailers to put this type of criminal activity into perspective. The 3rd Man wants more emphasis put on the fact that by and large Internet shopping is safe, and this is because most reputable retailers use secure software to ensure that the consumer’s financial and personal data is not compromised.

Each year billions of pounds is spent on Internet shopping by consumers in the UK, but the many stories about the risk of online shopping and credit card fraud could result in a drop in consumer confidence. The 3rd Man does advise consumers to ensure that the site that they are using is a secure one, and providing that this is the case there should be no need to worry.

The CEO of the company stated: “Every day there is a story about fraudsters cheating their way into our pockets. The introduction of Chip and PIN has made a massive impact on fraud, reducing crime in stores. It has also persuaded many fraudsters to target ‘card not present’ environments such as Internet shopping, but equally many retailers have recognised this and put in place proper systems to combat the criminals. If people wish to shop on the Internet they should be confident that it is fundamentally safe. It is the safest way to shop!”

More Info:

• Identity Theft

Even more convenience for A&L customers

Following in the footsteps of HSBC and First Direct, the Alliance & Leicester has revealed plans to introduce a new method of banking that will offer consumers even more in the way of convenience and flexibility – mobile banking. Consumers in the UK that have accounts with major banks and building societies can already enjoy the convenience and ease of Internet banking in addition to using the facilities and amenities available at the local branch. It seems that mobile banking could be the next big step for many banking companies.

Through the use of the mobile banking service on offer from the Alliance and Leicester, consumers will be able to quickly and easily check on recent transactions that have been made, will be able to check their balances, and will even be able to top up their mobile phone credit directly from their bank accounts. In the future, according to officials from the Alliance & Leicester, consumers will also be able to make money transfers and pay bills from the account.

For those that want to take advantage of this mobile banking service, registration will be made easy and simple, and can be done via the Internet or via the mobile phone. One spokesperson from the bank stated: ‘There has not been much technical integration and all we need to do is verify the customer and their bank account details, so it has been straightforward.’

One research analyst says that over time consumers will become used to this updated method of banking, as it means that they will have one more valuable facility to help with the smooth-running of their finances and accounts. However, he added: ‘It is taking consumers a while to use their mobile phones for more than voice calls, and it is difficult for a bank to teach people to use them in another way.’

Treasury Announces Investigation Of Travel Insurance Mis-Selling

By and large, Brits are a conservative consumer group.  As such, millions of us will gladly pay a relatively small premium to take-out a travel insurance policy before we go away on our holidays.  If you happen to have been one of the millions of Britons who have also experienced the reality of trying to claim on a travel insurance policy, only to find the insurance company worm its way out of the deal under one of the many exemptions, then you may well be delighted to hear that the Treasury has announced that it going to commence an investigation into the manner in which travel insurance is sold in the UK. 

Annually, we Brits spend over £1 billion a year on travel insurance premiums.  We do it because we believe we will be covered for almost all eventualities should something go wrong – either prior to the holiday itself or while on holiday.  In many cases, however, the harsh reality is that the numerous “get out” clauses that travel insurance policies customarily contain means the reality of being refunded, or even being compensated, for an event we thought was covered in our travel insurance is a far cry from what we may have been lead to understand when being sold the policy in the first place.

As such, of particular interest to the Treasury’s investigation will be the old gripe of whether or not travel insurances that are sold as part of a “holiday package” are being mis-sold.  While standalone insurance policies are regulated by the Financial Services Authority (FSA), travel insurance that is sold as part of a holiday package is not. 

Commenting on the current practice of possibly mis-selling travel insurance as part of a travel package, Economic Secretary Ed Balls said, “We need to find out whether travel insurance sold with a holiday is being mis-sold and if we need to educate consumers to consider the cover they want and ensure they are properly informed.”  This comes after Balls discovered that almost half of the UK’s 20 million annual travel insurance policies don’t cover terrorist attacks.

Although travel insurance policies sold by travel firms are not currently regulated, meaning that aggrieved policyholders have little or no right of redress against the travel firm, the announced forthcoming investigation by the Treasury may be just the wake-up call the industry needs to get its house in order or follow the fate of other financial service providers whose practices and activities have recently been curtailed following high profile investigations.

Nationwide puts an end to ’same mortgage’ deal promise to its existing customers

Despite the fact that the UK’s fourth largest mortgage lender has run a very public and prolonged promotional campaign based around its promise of giving exactly the same deal to its existing mortgage customers as it does to first-time buyers, come 1 December the Nationwide’s existing 1.2 million mortgage customers will no longer be given such treatment.

In what many are seeing as incredible marketing blunder, the Nationwide has announced that with effect from the 1 December it will no longer continue to treat its existing UK mortgage customers the same as it does new ones.  Henceforth, existing mortgage customers who want to re-mortgage, switch to a better deal, or borrow against the equity in their homes will be faced with higher interest rates than customers looking to buy new homes.

Unlike its main rivals, the Nationwide has long prided itself on the fact that it will not discriminate against existing customers, but with the new rates coming into effect from 1 December, Nationwide customers wishing to re-mortgage, switch to better deals, or simply borrow more on their equity will now face the prospect of two-tier interest rates that range from 4.73% for house purchases to 5.88% for re-mortgages.

In its defence, the Nationwide are claiming that the change to their policy is in-line with the UK home lending market’s trend of offering “slightly better rates” for home-movers.  This may be so, but for a UK home mortgage lender that has built such a public image around its promise of offering the same service to both existing customers and new customers, Ray Boulger, senior technical manager at Charcol, the mortgage broker, says, “There’s no way you can legitimately claim you’re offering the same deals for everybody if your existing customers don’t have access to the cheaper purchase rates.”

If it is any consolation, existing Nationwide customers will be entitled to receive a £100 discount off the reservation fee if the decide to switch from one Nationwide home mortgage product to another, or if they elect to increase the amount of their UK mortgage loan.  Nationwide also agreed to waive its re-mortgage administration fee of £99 for existing customers who re-mortgage.

Nonetheless, as Melaine Bien, associate director of Savills Private Finance comments, although the changes allow Nationwide to “become more competitive with its pricing when attracting first-time buyers,” the promise that no-one would receive preferential treatment at the Nationwide “no loner stands”.

Homeowners cautioned over the true cost of unsecured personal loans for home improvements

The latest figures released by the British Bankers’ Association (BBA) show that 198,242 mortgages, totaling £21.8 billion were approved in the UK in October, a six percent increase on September’s figures and an eight percent increase on the figures year-on-year.  At £144,200, the average UK residential property mortgage also saw a slight increase during the month.

Nonetheless, while, “the secured lending market undoubtedly remains robust,” according to David Dooks, director of statistics at the BBA, “after discount price growth, lending volumes are not dissimilar to the same time last year” – indicating that the recent base rates increases by the Bank of England mat be having some effect on the demand for UK property borrowing.  A factor echoed by Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, who foresees a slowdown in the UK property borrowing during the course of the next year once the full impact of those Bank of England rate increases filters through and the true higher cost of borrowing starts to be felt.

In the meantime,  a recent report by Money Expert is warning that an increasing number of UK homeowners are now opting to take-out unsecured personal loans to finance their home improvement projects over more cost effective ways of this type of borrowing. 

While this may, itself, not be too alarming, Money Expert’s findings also indicate that UK homeowners are not fully aware of how much their unsecured personal loan borrowing is costing them in extra interest payments.  In some cases, interest repayments on a four year £10,000 unsecured personal loan taken-out for home improvement projects can vary by as much as £2,500 – or 25%.

Sean Garden, chief executive of Money Expert, therefore warns, “Personal loans can vary in price dramatically – you could end up paying back as much as a quarter of the amount you borrowed in extra repayments unless you research the market carefully.”

As such, if you are one of the many new homeowners who have recently been approved a UK home mortgage loan and are now looking to undertaken some DIY home improvements on your new home, make sure you look around and research the many different types of UK unsecured personal loans available in the market to make sure that you get an unsecured loan that meets your needs without breaking the bank in extra interest payments.

Life insurance costs can rocket if you are overweight or a smoker

Although it has long since been known that life and health insurance companies charge higher premiums to consumers that are considered a higher risk, such as those that are very overweight or those that smoke, recent data has shown just what a dramatic difference smoking and excess weight can have when it comes to increases in insurance premiums, with many insurance companies charging over fifty percent more on policies to smokers and the very overweight than on policies to non-smokers and those not overweight.

The data suggests that insurance companies are really cracking down when it comes to what they consider are high risk customers, protecting themselves against increased risk of financial losses through charging a lot more on the cost of the premiums. These insurance companies look at high risk factors such as obesity and smoking when working out a policy, and those that come under the category of obese or smokers are seen to be a higher risk because they are more likely to make a claim according to insurance companies.

A life insurance manager at Sainsbury’s stated: “Health risks associated with smoking can have a big effect on life cover costs. It is vital for those that have kicked the habit to review their policies.” However, a number of pro-smoking organizations have raised concerns about the way that insurers automatically charge more to smokers than non-smokers, stating that the risk of a smoker under forty dying is no higher than that of a non-smoker.

A recent comparison study was carried out and this showed that on average smokers were charged around fifty six percent more on these insurance policies than non-smokers. The study was carried out through sending applications from two men of the same age to a number of the UK’s top insurance companies, and seeing what the price difference was based on one being a smoker and the other a non-smoker.

Consumers could save money on home insurance

A number of studies carried out in relation to consumer trends with buildings and contents insurance have shown that a large percentage of consumers could save a small fortune on the cost of their insurance premiums by taking a few simple steps. A recent survey was carried out by Tesco, and the results indicated that many consumers could be paying up to twenty five percent too much on their premiums for buildings and contents cover.

In many cases consumers are failing to shop around for good deals on home insurance cover simply because they think that they have to take the insurance cover that is offered by their mortgage provider, which is not always the case. The head of insurance at Tesco stated: “Many consumers are apathetic about their home insurance or believe it is an integral part of their mortgage. Others suspect the saving made by shopping around won’t be worth the effort but that isn’t true.”

As part of a survey, around 125 consumers were asked to shop around when it came to renewing their home insurance, and out of these a quarter discovered that they were paying around seventy five pounds more than they needed to on the cost of their premiums. The other seventy five percent from the survey also discovered that they could make some form of saving on their cover simply by shopping around.

In addition to shopping around, Moneysupermarket.com has advised consumers to ensure that their home is made secure through the fitting of security locks, burglar alarms, and other security devices, as this could also help to slash the cost of insurance premiums through reduced risk. Consumers may also find that purchasing a combination package of buildings and contents cover could save them money on the overall cost of their home insurance.

Will other banks follow First Direct and charge fees on current accounts?

Following the shock announcement recently made by officials from First Direct Bank, a subsidiary of HSBC, that it intends to start charging customers that do not pay a certain amount into their current accounts each month, many are now wondering whether other banks and building societies will follow suits, bringing to an end the era of free banking for consumers in the UK.

First Direct made the announcement last week, shocking experts and customers by stating that a ten-pound monthly fee would be charged to current accounts that did not have at least fifteen hundred pounds in. It has now been revealed that Nationwide may also be looking into charging bank account holders in the same way at some point in the future, with one executive from Nationwide allegedly stating: “I don’t think we can rule out charging for current accounts totally although we have no immediate plans to introduce such charges at the moment.”

Halifax, on the other hand, have promised that it will not be introducing any such charges on current accounts, and is in fact planning to open three new branches in the UK, as it is thought that many existing First Direct costumers will now be eager to find alternative banking solutions in order to protest against and avoid the new charges being introduced by First Direct.

One official from the Halifax stated: “Halifax is committed to free banking, and we would hope that other banks and building societies share this commitment.” Sadly it looks as though First Direct do not share any such commitment, and the impressive reputation and customer base that this Internet bank has built up over recent years is likely to take a tumble over the forthcoming months, with consumers desperate to get their accounts switched to a non-charging bank or building society.

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Fierce Competition Likely to Push Car Insurance Premiums Down

Despite the recent announcement by Norwich Union that it is to increase premiums on its UK motor insurance policies by up to 16 per cent. in the coming year, recent research undertaken by Defaqto indicates that fierce competition among UK car insurance providers is likely going to result in car insurance premiums falling in the coming months.

According to the findings in Defaqto’s recently released report, “Motor Insurance in the UK – Adapting to Survive”, many of the UK’ leading car insurance providers are either electing to keep their car insurance premiums frozen this year or are looking to reduce premium burdens on their customers.  With UK car insurance premiums constituting £7.4 billion in sector revenues for 2006, many of the UK’s leading car insurance policy providers now acknowledge that intense market competition is stopping them from following Norwich Union’s lead and increasing premiums.

To a large extent, most of the competitive pressure on car insurance premiums in the UK is coming from savvy motorist who have now learnt that looking online for discounted car insurance is the easiest and quickest way of finding cheap UK car insurance.  Brian Brown, Defaqto’s head of general insurance research commented that “With the Internet, it is now easy for customers to shop around and so many insurers are still giving introductory discounts, cash-back or guarantees to beat other quotes, that there is little, if any, need for customers to stick with their existing insurer when faced with premium increases”.

The question of whether or not UK motorist can look forward to reduced car insurance premiums is still, however, subject to whether or not large UK motor insurance providers, such as the Royal Bank of Scotland, decide on price freezes.  If RBS were to decide that now is not the right time to push through a price hike, then joint competition from RBS and alternative discount UK car insurance available on the Internet will almost certainly result in premium freezes or reductions in the coming year.

Nonetheless, UK motorist still need to be careful they read their UK motor insurance policy carefully as over 60 per cent. of motor insurance providers in the UK now recoup lost revenue from premium reductions in the form of policy adjustment charges.  Here, Defaqto’s report found that the fee to cancel a UK car insurance policy can cost the policyholder as much as £75.  However, Defaqto are also quick to point out that following the Office of Fair Trading move to reduce late payment fees on UK credit cards, it is likely that these high additional fees will not be round for long – with or without the OFT’s intervention. 

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