Lending figures expected to see mixed reactions

Over the past decade Britain has become addicted to borrowing, and up until the onset of the global credit crisis most people – including those with damaged credit – were able to get finance pretty easily with banks and financial institutions eager to loan money to anyone that wanted it. This has, of course, resulted in a huge personal debt mountain that has left many people struggling with their finances and unable to keep up with their debt repayments.

The Bank of England is set to release figures later this week relating to mortgage lending and consumer credit. It is widely thought that the figures will show that lending and consumer credit levels are very low. It is thought that whilst some people will find that the figures make for very bleak reading indeed there are many others that will see the subdued lending data as a positive sign.

Many city officials are likely to see the low lending levels as something that could dampen the economic recovery and reduce consumer confidence levels. However, some people will see them as a sign that Britain is not as addicted to debt as it once was and that consumers are now focussing on trying to clear their debts and live within their means rather than borrowing money at the drop of a hat to buy things that they cannot really afford.

Peter Dixon, strategist at Commerzbank, said: ‘Within the context of rebalancing the economy away from personal debt, these low figures may be no bad thing. Those who argue that borrowing should be stronger are missing the bigger picture.’

Ross Walker, economist at Royal Bank of Scotland, said: ‘The British household sector needs to de-leverage. This is happening, but at a snail’s pace. That said, a more rapid correction would probably be associated with recession in consumer and property markets.’

Tags: decade britain, credit, Britain, mountain, city, business, week, drop of a hat

Many paying for fuel with credit cards

For many people credit cards have provided a convenient and simple means of making payments instead of paying cash or using cheques. However, it appears that these days credit cards have become an essential tool to help people afford to fill up their cars so that they can get around. Many people have used their cards at petrol stations in the past simply because of the convenience that they provide. However, these days people are said to be using them out of necessity.

As all drivers will know the cost of petrol and diesel has rocketed over recent months, and the cost of filling up a tank has soared. As a result of this many people have had to resort to using their credit cards to pay for fuel at petrol stations because they cannot afford to do anything else, and this has sparked concerns about the knock on effect that this will have on consumer debt levels.

Daily living costs have soared in many areas recently, yet many people have seen their pay either frozen or reduced because of the recession and the financial climate, which has left most struggling to cope with the rise in the cost of living. Many people are not only paying for their fuel with their credit cards but are also now meeting other essential living costs with their cards. Many are unable to make much more than the minimum repayment after using their cards to this degree and will come to a point where they have maxed out their card and have massive debts to pay as well as still having to find a way to meet the cost of living.

One official said: “With inflation hitting 4.4 per cent last month, it’s not surprising that many families need to resort to using their credit cards for more and more living expenses. But we believe this does highlight just how important it is to keep on top of credit commitments overall.”

Tags: Daily, credit, climate, knock, payments, consumer debt levels, consumer, credit commitments

Family debt set to spiral

It has been suggested recently that family debt is set to spiral out of control over the next four years, with families expected to be struggling with average debts of around £84,000 per household. A report claims that the level of total household debt by 2015, including mortgages, loans, and credit cards, will reach an amazing £2,126 billion. For many this prediction is cause for concern given the difficult financial future that many people are already facing.

The documents were released by the government’s spending watchdog, the Office for Budget Responsibility. Over recent months this agency is said to have significantly increased its predictions when it comes to the size and level of household debt in Britain. At present the debt level stands at £1,628 billion but it is predicted that this will increase every year until the end of parliament in 2015.

The Office of Budget Responsibility has said that part of the reason for this increased forecast when it comes to household debt is the austerity drive from the government, which is set to have a huge impact on families and households, affecting their finances hugely. In June of last year the prediction was that household debt would stand at £1,823 billion by 2015.

There are concerns that as a result of the government cutbacks, the soaring cost of living, and wage freezes or cuts, many families will have no other option but to increase their debts in order to keep their heads above water, but their ability to do this and to repay their debts will eventually run out, leaving them in a very difficult financial situation.

Labour’s treasury spokesman David Hanson said: ‘Hard-pressed families will have to borrow more money to deal with the effect of George Osborne’s tax and benefits squeeze.’

Tags: Business Finance, debt level, government cutbacks, situation, credit, Cost of living, financial, option

Loan sharks could become bigger problem because of Christmas

There are concerns amongst industry officials that problems relating to unlicensed and unregulated loan sharks could get worse as a result of the festive season and the current financial climate. Many people have struggled to get finance such as loans, credit cards, and overdraft, for the past couple of years due to the financial crisis, and with Christmas around the corner money will be tighter than ever leading to increased desperation for many.

 

The lack of finance availability for many people has resulted in many vulnerable consumers turning to other measures such as doorstep lenders and loan sharks, and this is something that has already been causing concern for officials. Whilst doorstep lenders charge a lot of interest they do not cause as much concern as loan sharks, as these are not even licensed lenders and have been known to swindle borrowers, resort to violence to get their money, and more.

 

Authorities are now continuing to urge consumers to steer clear of loan sharks no matter how desperate they get, as taking money through an illegal loan shark will not only financially crippling but could actually end up ruining the lives of people who get caught up with some loan sharks who will resort to anything to get their money.

 

Officials are also worried that with Christmas coming up more struggling consumers could end up turning to these sharks, and could put themselves in financial and physical danger as a result of this. Many people do not have any savings to spend on Christmas, and reports have shown that there are many consumers that are unable to raise even £200 to cover the cost of Christmas gifts and other purchases, which would increase the chances of them turning to less reputable lenders and illegal lenders.

Tags: GBP, loan sharks, credit, climate, finance availability, measures, authorities, loan

Tighten your spending for next year

With all the uncertainty over the economy and job losses many people will be stressing over their finances and for many people sorting out their finances for the New Year will be a priority. It is always a good idea to start the New Year with a streamlined budget, as it means that you can focus on your finances and try to get them into some sort of order over the course of the year.

With this in mind it is a good idea to start now when it comes to trying to sort out your finances, and there are a few simple steps that you can take, which could help you to organise your finances more effectively, make your budget more manageable, and even reduce the amount of money that you pay each month.

The first step is to go through your finances with a fine toothcomb. You need to make a list of all of your income and all of your outgoings so that you know exactly what is going into your account and exactly what is coming out of it each month. This will allow you to see where you can make cutbacks and what changes you can make to benefit you in terms of your financial situation.

Many people have a variety of payment that they make for things that they do not even use, such as gym memberships even though they never get time to go, magazine subscriptions for magazines they no longer read, and various other payments that they may have forgotten about. Take the time to cancel anything like this, as it could mean big savings each month.

Once you have gone through your finances with a fine tooth comb it is time to see whether there is anything that you can reduce payments on by switching. Many people switch services such as their utilities, broadband, insurance, credit cards, and even mortgage in order to save money, and shopping around for a better deal could make a big difference to the amount that you have to pay out each month by reducing the cost.

Finally, look at any debt that you have and consider whether consolidation might reduce your repayments and get you a better deal. You could consolidate all of your debt such as credit cards, overdraft, and loans, into one, which would save you time and hassle each month and reduce your monthly repayment.

Tags: list, overdraft, month, broadband, credit, amount

Mortgage lending in UK to remain subdued

According to a mortgage industry group mortgage lending in the UK is likely to remain subdued and could go into decline as the year comes to an end. Lenders are said to have loosened up on their restrictions over mortgage lending over recent months following the financial chaos caused by the credit crisis and the recession, but many are still struggling to get the finance that they need to buy a property.

The Council of Mortgage Lenders claims that the mortgage market is likely to continue its decline, with the number of loans approved for the month of October this year down by 9 percent for the same month last year. This was also the lowest total for the month of October since 2000. The group said that year on year lending levels for mortgages are likely to continue their decline over the coming months.

The Council of Mortgage Lenders has also stated that the total gross mortgage lending figure for the whole of this year is likely to reach £137 billion, which is thought to be the lowest since 2001. Many first time buyers are still struggling to get a mortgage at the moment, which has left many unable to get onto the property ladder, forcing them to have to rent and driving up the cost of renting a property.

However, in a separate study that was carried out by Sainsbury’s Finance it was claimed that the rock bottom base interest rate, which still stands at just 0.5 percent, is resulting in homeowners’ mortgage repayments plummeting, with the average cost of mortgage repayments said to have fallen by around 27.67 percent since 2008. This takes the figure for mortgage repayments to an average of £8059 per year according to the figures from the supermarket giant.

Tags: Banking, Loans, mortgage, mortgage industry group, credit, decline, Subprime crisis impact timeline, finance

Finding PPI to suit your pocket and needs

Many people have heard of Payment Protection Insurance, or PPI, these days, and not necessarily for the right reasons. This is a type of insurance typically taken out with various forms of credit such as credit cards and loans, but has been hitting the headlines with alarming regularity over the past couple of years due to claims that it has been widely mis-sold by banks and financial institutions.

PPI is a type of insurance that is designed to cover repayments on credit for a specified period of time if the policyholder cannot work due to sickness, accident, or redundancy, and the cover provides many people with peace of mind. However, the controversy has arisen because in many cases in the past the cover was sold to those that could not claim on it, was added to credit agreements without the prior knowledge or consent of the borrower, and was sold to consumers by giving them the impression that they had to take it out with the lender in order to get the finance that they needed.

However, it has now been announced that the Competition Commission in the UK is placing a ban on the sale of PPI at the same time as financial products by banks, and this means that consumers will no longer have to face the uncomfortable feeling of trying to squirm out of taking out the cover whilst the lender is trying to push it onto them relentlessly.

For those that do want to take out the cover for their own peace of mind it is important to shop around, as you can get this type of cover from a number of providers and the cost can vary from one provider to another. In addition to this it is also worth working out whether this is the best type of cover for you, or whether you might be better off with an alternative, such as income protection, which would cover your income as opposed to certain debts.

In addition to hunting around for the best price on PPI – which can be a costly form of cover – by comparing different policies and providers consumers should also ensure that they read the policy terms and conditions carefully to ensure that they are eligible to claim and familiarise themselves with any restrictions that are in place on the policy that they are considering.

Tags: Competition Commission, finance, Insurance, credit, ppi

Millions have a year or more of debt on their cards

It has been reported that millions of borrowers in the UK have outstanding credit card debts of a year or more, with many only managing minimum repayments on their debts in the current outstanding climate. According to the report more than six million people have had an outstanding balance on their credit cards for at least a year.

Research was carried out by moneysupermarket.com, and officials from the firm claim that almost 10 percent of people admitted to paying only the minimum amount off on their credit card debts each month. This has resulted in 14 percent of cardholders having debt on their credit cards for over five years, with the minimum repayments barely covering the interest on their debt.

Industry officials have warned that those paying off their debts with just the minimum repayment each month will not only spend years longer repaying the debt but will also pay a huge amount in interest over the term of the debt. However, in the current financial climate following the credit crisis and recession many cannot afford to pay any more than the minimum.

The average length of time that a balance is left outstanding on a credit card according to the survey results is twenty one months, and officials want to ensure that consumers understand the repayment structure and the consequences of minimum repayments.

An official from Moneysupermarket.com said: ‘Our research reveals credit cards are still playing an important role in the nation’s finances, but in the current climate, it’s more important than ever for consumers to understand the cheapest way to borrow on their cards and avoid getting stung by high interest rates. The most important thing is that consumers understand the implications of borrowing on a credit card and that paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run.’

Tags: Credit Cards, debt, credit, Credit card, cheapest way, Moneysupermarket.com

Government advises consumers to be aware of payday loan risks

There have been mixed opinions about payday loans over the past year or so, with these loans being highlighted as a result of the rising number of people that have been turning to them because of difficulties in getting credit elsewhere during the recession and financial crisis.

Many officials have expressed concern over the rate of interest that is charged on payday loans, stating that consumers often fail to realise what they are getting themselves into when they take out payday loans because they cannot get finance in any way. However, there are also many people and officials that state that payday loans provide a useful service to those that are in need of finance but can’t get it from other sources because it stops them having to go to loan sharks.

On its DirectGov website the government is now advising consumers to ensure that they learn about the dangers of taking out payday loans before making any commitment, and to ensure that they do not jump in without doing their research as they could otherwise get caught up in a debt trap.

The site states that there are rising numbers of people that cannot get finance from traditional banks and lenders, which means that a rising number of people are likely to go to payday lenders in order to get finance. This could have a further impact on the number of people that find themselves with spiralling debt, which will add to the already worrying personal debt problem that exists in the UK.

The site advises consumers to fully understand the charges and costs involved with payday loans, ensure that they do not borrow more than they need or for any longer than they need to, and to ensure that the lender is a member of the British Cheque and Credit Association (BCCA).

Tags: loan, credit, debt, Payday loan, consumer debt

Personal loan rates need to be capped

Calls have been made for the government to put a cap on the interest rates charged on personal loans. This follows research that showed that most consumers in Britain want to see a cap on the rates of interest that lenders can charge for personal loans. The research was carried out recently by Compass on behalf of YouGov.

According to the results of the study around 68 percent of consumers believe that the government has a responsibility to protect consumers who take out personal loans by ensuring that a cap is put on personal loan interest rates. In addition to this the research found that a similar number of people, around 69 percent, wanted to see government officials promoting affordable means of credit such as credit unions.

Earlier this year a report was produced by consumer watchdog group Consumer Focus, and this showed that the popularity of ‘legal loan sharking’ was increasing. The watchdog’s report showed how the number of people that were taking out payday loans had quadrupled in the past four years, with around 1.2 Brits now taking out such loans.

The Association of British Credit Unions also issued a recent warning to consumers, warning them to be vigilant for loans that seemed attractive but in actual fact charged up to 2500 percent in interest per year. Compass said that the calls for caps on personal loans would be a test to see whether the new government would be supporting consumers or lenders.

One Compass official said: “This is a key test of the coalition government’s stated commitment to create a fairer society. Now we need to see if it backs the people or the financiers.”

Tags: Britain, loan, interest, cap, credit, finance

Billions accrued in debt during downturn

It has been claimed in a recent report that Brits have managed to accrue billions of pounds in debt during the economic downturn as a result of their shopping addictions. Despite the money worries and concerns over job security that have been experienced by many consumers many have continued indulging in their shopping addiction, and accruing huge debts into the bargain.

The comparison website uSwitch claims that British shoppers have managed to accrue £24 billion worth of debt as a result of their recession shopaholism, which is a term that the website uses to describe those that have built up more than half of their debt through purchases of fashion items.

The breakdown provided by the website showed that there were more women than men that were classed as shopping addicts, with three million men and four million women. However, the average debt accrued was higher amongst men, coming to £3425 compared with £3353 for women. Unsecured debt for women in Britain came to £13 billion and this compared to £10 billion for men.

An official from uSwitch said that although finances have been strained for many people many women had continued to follow their idols and buy a range of expensive fashion items including clothes, handbags, and shoes rather than curbing their spending on fashion shopping in order to save money and ease the financial strain. In some cases those that have accrued debt by shopping for non-essentials during the downturn have said that the recession and economic downturn has been the cause of their spending, as they have shopped to cheer themselves up.

uSwitch officials said: “Despite the financial constraints, women have carried on copying the lifestyles and shopping habits of their idols and ignoring the debt they are racking up in the process.”

Tags: consumers, Financial services, credit, Brits, report, debt, finance, uswitch

Payday loans soar due to credit crunch

Payday loans have been at the centre of controversy for some time, and this is largely due to the high rate of interest charged by these lenders on an annual basis. However, some have argues that these lenders receive unnecessary bad press, because the interest charged is not that much providing the loan is paid back in time, and some officials argue that these loans can be very useful for those that desperately need short term financial help.

It has now been reported that the level of payday loans being taken out has soared partly as a result of the global credit crunch, which has left many people short of cash and in financial dire straits. In the space of four years the number of people taking out these payday loans is said to have quadrupled, as more and more people find themselves desperate for cash for a short term period.

The APRs that some of these payday lenders charge has caused a lot of concern over recent years, but for those that only borrow for a short period and repay the loan on time rather than rolling it over the cost of borrowing is not as bad as it sounds. Some charity officials have said that it is preferable for consumers to go to payday loan companies for short term loans to tide them over rather than unscrupulous loan sharks.

Whilst there have been calls for these loans to be banned officials from Consumer Focus said: ‘These products are controversial, but we don’t agree with calls for them to be banned. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead we need sensible safeguards now to stop borrowers becoming dependent on this high cost credit and prevent even more stringent controls being needed in the future.’

Tags: help, debt, loan, borrowing, concern, rate, Payday loan, credit

What to look for with a personal loan

Whilst credit conditions have undoubtedly been strained over the past couple of years many believe that things are now easing up in the financial markets, and whilst lenders have not gone back to the days of easy credit the availability of loans and finance does appear to be easing up to some degree.

With this in mind many people may now start to think about taking out a personal loan for a variety of purchases, and with things easing up in the financial markets the choice of personal loans is greater than before, and there are some pretty good deals available for those that have a decent credit history and score.

There are many lenders that offer personal loans, and which cater for the needs of a wide range of people and needs. It is important for those that are looking for a personal loan to do some research and familiarise themselves with the different loans and deals available so that they can make a more informed choice when it comes to deciding which of these loans to opt for.

It is easiest to use the internet to browse and compare the different personal loans available, as this will allow you to quickly see which loans fit in with your needs and your budget without having to deal with any pushy sales people or feel embarrassed about going through your finances with someone on the phone or in person.

There are a number of key areas that you need to look at when browsing personal loans with a view to taking one of these loans out. The interest rate that you will be charged is a very important consideration, so this is something that you need to compare. However, do bear in mind that if a lender advertises a typical APR this does not mean that you will necessarily get that rate of interest but that most of the lenders customers get that rate.

The repayment periods on personal loans can vary from one provider and loan to another, so this is something else that you need to look at when you are deciding which loan you should go for. If you want to keep your repayments down then you need longer repayments periods, so make sure that you know what’s on offer.

Other things that you need to look at include the overall monthly repayments to ensure that you can afford the repayments, the eligibility requirements, the terms and conditions of the loan, and the borrowing limits, although this will vary based on your financial status.

Tags: loan, status, overall monthly repayments, personal finance, Unsecured loan, credit

Getting better information on credit in current economic and financial climate

The global financial crisis and recession has had a profound impact on the lives of many people in terms of finances, and one of the areas that has been deeply affected by the economic and financial climate over the past couple of years is the financial sector. Read more

Tags: finance, capital one, Credit history, Credit score, credit

Problems with loan sharks being tackled by specialist team

A specialist team is dealing with problems relating to illegal loan sharks, with officials from the team expressing concerns about the number of people that are falling for illegal loan shark finance due to desperation in the current financial climate. One official from the illegal money lending unit covering North Staffordshire said more people were turning to these lenders as a result of the effects of the recession.

The global credit crisis has resulted in credit drying up for many people, making it difficult for them to get the finance that they need, and for many desperate times has led to desperate measures, forcing them to turn to less reputable lenders when it comes to borrowing money.

The problems relating to loan sharks are now being tackled by the Central England Trading Standards Illegal Money Lending Team, which was launched back in 2004. The team is funded by the government and is responsible for gathering evidence on loan sharks.  

As part of their investigation into the practices and activities of loan sharks the team has set up a twenty four hour hotline that allows consumers to ’shop a shark’ and give the team more ammunition when investigating these loan sharks.

As a result of the hotline the investigators recently managed to catch out one loan shark and get him sentenced. The team hopes to be able to catch out many other loan sharks through the hotline.

An official from Staffordshire County Council, where the sentenced loan shark was from, stated: “We hope this sends out a strong message to anyone thinking they can make money illegally. These people prey on vulnerable residents without any remorse which is thoroughly shameful.”

Tags: credit, Loan shark, Shark, finance, loan

Virgin Money makes changes to repayment system

Many Virgin Money credit card customers have been pleased to hear a recent announcement from the financial giant with regards to the repayment allocation on its credit cards. Virgin has announced that as of the start of September any repayments made on the Virgin credit cards will be allocated to the more expensive debt first, which could potentially save credit card holders a fair amount in interest.

Under the current repayment system, as is the case with many credit card providers, anyone that repays their debt gradually on the Virgin credit cards will see the repayment being out towards the cheapest debt first, which is often interest free debt. This means that more expensive debts that have high interest rates can be left to faster and continue accruing interest, which means that customers often end up paying out more.

The move to make credit card providers allocate customers’ repayments in this way has been pushed by regulators and financial authorities in the UK following similar moves that were taken in the United States. However, whilst lenders who offer credit cards will have to adopt these measures eventually many have surprised customers by bringing in the moves earlier than was necessary.

Virgin Money has become one of a number of credit card providers to bring in the changes to the allocation of repayments earlier than they needed to, and collectively customers could save a huge amount on interest as a result of these changes being made early.

One customer said: “I think its great that Virgin have decided to take this action early, because it will allow customers to save a fortune on the interest that they would otherwise have to pay.”

Tags: Virgin Credit Card, way, Credit card, finance, credit, regulators

Fall in lending to businesses seen in May

According to recent reports the level of lending to UK businesses fell in May, despite efforts from industry groups and the government to try and boost lending by banks to businesses. Whilst the level of mortgage lending in May improved compared to the previous month the level of business lending took another hit.

The figures have been released by the British Banker’s Association. The level of lending to private, non-financial companies is said to have plunged by £1.3 billion in the month of May, which was slightly higher than the fall seen in April but slightly lower than the average decline seen over the past six months.

These businesses are said to form the backbone of Britain’s economy, and many have highlighted the importance of enabling these businesses to borrow the money that they need. However, banks are still being very cautious when it comes to lending, as many are still reeling from the financial meltdown.

In addition to this the falling demand for finance from these businesses is also affecting lending levels, and many businesses are loathe to take out costly loans and finance in the current climate. With fewer businesses wanting to take the financial risk of borrowing more money demand levels have fallen and subsequently so have lending levels.

Officials have also said that there has been an increase in retail sales, with the higher property sales levels now impacting upon the retail sector. Household goods and furniture retailers were said to have seen improvement, as did grocery retailers who may have benefitted from people stocking up for the World Cup.  Electrical retailers also benefitted as a result of people buying new television sets in preparation for the World Cup.

Tags: loan, bank, finance, business, credit

Exercise caution when looking for a non-traditional loan

These days many people are looking to get finance or credit of some sort, but because of the difficult financial climate and the increased caution being exercised by lenders many are finding it increasingly difficult to get the finance that they need.

As a result of this there are many borrowers that are turning to less traditional means of getting credit or raising finance, and whilst some of these options can prove useful and helpful for consumers industry officials have warned that caution should always be exercised to ensure that the deals that are available are fair and affordable.

There are a number of options available to those that need to get money but cannot afford to get credit from traditional lenders. However, before jumping in and taking up one of these options it is important for consumers to consider the cons as well as the pros, and to ensure that they are not getting ripped off as a result of the transaction.

One of the options that people might use when they are unable to get traditional finance is a payday loans company, which offer short term loans to tide borrowers over until payday. The APR charged on these loans can be very high. However, most will charge a fixed fee such as £10 per £100 borrowed and if you are only borrowing over a short period this may be an affordable option. Most do not carry out credit checks either, although proof of income must be provided. If you are considering a payday loan make sure that you check a few and compare the fees and charges so that you can get the best deal.

Another option that many people might look at is to get cash for gold, with a plethora of advertisements trying to tempt consumers to send in their gold jewellery in exchange for cash. However, many reports have claimed that the consumer often only gets a fraction of the value of the jewellery when doing this so you need to make sure that this is a viable option for you and don’t let yourself get ripped off over how much you are paid for your jewellery.

Finally, many people that cannot get mainstream finance may be tempted by doorstep lenders, and more worryingly loan sharks. You should bear in mind that with doorstep lenders you may be charged an extortionate rate of interest, which could be financially crippling. When it comes to loan sharks you should always avoid them and look at alternatives, as these are unregulated and often unscrupulous lenders, and you could end up in very hot water by borrowing through them.

Tags: difficult financial climate, Payday loan, traditional finance, mainstream finance, finance, rate, personal finance, credit

Consumers saving more and using credit cards less

Recent reports have shown that consumers are getting far savvier about their finances, with many now choosing to save money and shore up their finances rather than splashing the cash on large purchases or spending ruthlessly on their credit cards. This indicates that consumers have become more accustomed to the fact that they need to save money to help them through in the current climate and that they have to be more mindful about their spending.

Prior to the global credit crisis and the recession many of those that are now saving their money may not have thought twice about using the money to purchase big ticket items, splash out on luxuries, and spend on items that they didn’t really need. Likewise, many may not have given a second thought before going out armed with their credit card and treating themselves to pricey luxuries.

However, over the past couple of years many people have realised how important it is to have money put aside to help them through in the event of a financial emergency or if they lose their jobs. With this in mind more and more people are putting money aside and avoiding spending unnecessarily. According to reports a rising number of people are also trying to pay off their debt so that they can be more financially secure in the future.

A spokesperson from ING Direct, which released the report, said that many people were now trying to get over the debt that they accrued over the Christmas period and were focussing on saving or repaying their debt.

He said: “We are also seeing a trend, which is getting stronger and stronger, that people start saving before they make big purchases and use their credit cards less and less.”

Tags: debt, credit, finance, spending, saving

Getting a good deal on a personal loan

Over the past couple of years the availability of personal loans has become somewhat restricted, and the global financial crisis and recession have made it difficult for many people to get a good deal on personal finance. However, the market is now starting to ease, and this means that whilst personal loans are by no means being dished out like smarties, as they were in the days before the credit crisis, it is a little easier to come by a good deal on a personal loan than it may have been a year or so ago.

These days people use personal loans for all sorts of purposes, and if you get the right loan this can be a great way to fund a range of things that you may want. Whilst the use of personal loans for debt consolidation has fallen over recent years many people use these loans for things such as improving their homes, buying a new vehicle, paying for a wedding, or even funding a dream holiday.

Your ability to get a low cost personal loan will depend on a number of factors, including your credit history and rating. Those with good or excellent credit should be able to find a low rate personal loan without any problem, whilst those with a tarnished credit history may find it difficult to get a personal loan or may have to pay a higher rate of interest because of the increased risk they pose to the lender.

In order to get the best deal on a personal loan you need to make sure that you compare the deals on offer, as this will boost your chances of finding a loan that comes with affordable repayments. You can compare loans quickly and easily online, and using a comparison site could help to save you time as you can check out a range of personal loans and providers at a glance.

When you are comparing personal loans there are a number of things that you need to look at to check the suitability of the loans. You should check out the interest rate on the loans, as this will determine how much you repay on the loan. Also, compare the repayment periods available, as this will give you an idea of how much you need to repay each month. Always ready the terms and conditions of the loans to check on any penalties or extra charges.

Tags: finance, personal finance, Unsecured loan, credit, loan

OFT tackles irresponsible lending

Over the course of the decade leading up to the global financial crisis there was a period of easy credit in the UK, and lenders were throwing cash at people and businesses hand over fist in a bid to get their custom. Even those with damaged credit usually had no problem getting a loan or mortgage during this time. However, when the credit crunch swept the nation things came to a head, and over the coming months the banking industry was brought to its knees bringing with it the worst financial crisis in recent history.

Whilst things have improved and the financial sector is slowly getting back on its feet the days of easy credit are definitely gone, and lenders are being far more stringent about who they lend to. One of the main causes attributed to the financial crisis was irresponsible lending from banks and financial institutions, which had been eager to lend money to people without even running checks on whether they could afford to repay it in many cases.

Of course, the financial crisis is something that the UK does not want to see repeated, and with this in mind banks are now being discouraged from falling back into their old ways of lending to anyone. The Office of Fair Trading has recently produced guidance for banks, a requirement of which is aimed at ending the days of irresponsible lending.

The OFT has told the banking industry that it must not mislead consumers when it comes to providing finance, and that stringent checks must be carried out before any finance is agreed to ensure that the consumer is in a financial position to afford the credit being taken out. The OFT sad that is fully expected the industry to comply with this.

An official from the trade association, the Finance and Leasing Association, said that the new regulation would help to protect consumers, ensure that people did not get stuck with debt that they could not afford to take on, and would help to weed out unscrupulous lenders.

The new regulation has also been welcomed by the Citizen’s Advice Bureau, which tackles many cases relating to debt that consumers cannot afford to repay.

An official from the charity said: “Irresponsible lending plays a significant part in many of the debt problems we see in Citizens Advice Bureaux. The focus on getting firms’ practices and procedures right is a big step towards ensuring consumers are treated fairly and not encouraged into taking out unaffordable and unsustainable credit that lands them deep in debt.”

Tags: nation things, debt, finance, new regulation, credit, Banking

Recreated paperwork could cause problems for borrowers

According to a recent report many lenders tend to misplace or lose loan and credit agreements, and in some cases this paperwork is even disposed of, which means that if and when the banks need to refer to the agreement for any reason they are having to recreate the agreement. Whilst this is not frowned upon there is one problem that has been highlighted, and this is the fact that the recreated document often has discrepancies that leave the consumer even worse off. Read more

Tags: High Court, credit, debt, personal finance, Banking, consumer credit lawyer, Mortgage loan, office of fair trading

Credit card companies to start targeting high earners again

Whilst there has been something of a credit boom in the UK over the past decade, prior to this boom it was not unusual for credit card firms to focus only on wealthy, higher earners, leaving those on lower incomes out in the cold when it came to getting credit. In fact, seeing someone open a purse or wallet with a string of credit cards suggested that the person was well off and earned good money. Read more

Tags: interest rates, credit, Sandra Quinn, Payment systems, Credit history, Debit card, Credit Cards, PricewaterhouseCoopers

False sense of security for consumers being asked for minimum repayments on credit cards

Experts have recently expressed concern that many credit card customers may be getting lulled into a false sense of security as a result of credit card companies asking for very low minimum repayments on their credit card balances. Read more

Tags: lloyds tsb, Stoozing, Credit card, credit, Lloyds Banking Group PLC, debt

Cold weather does not put Christmas shoppers off

With the effects of the recession and the global financial crisis still taking its toll on many households many may have been keen to cut back on the spending this Christmas and try and avoid spending a fortune over the festive season. However, despite the financial difficulties that many are facing at present it appears that even the freezing weather in the UK has not put off the shoppers that are determined to get their purchases bagged and home in time for the big day. Read more

Tags: Snow, purchases, Richard Dickinson, economics, christmas, recessions, credit, New West End Company

Further limit reductions on credit cards could be in the pipeline

It has been claimed in a recent report that a growing number of credit card customers in the UK could see their credit limits reduced as credit card providers do their best to shore up their finances and claw back some revenue. Read more

Tags: bank, United Kingdom, credit, credit card limits, mention

Citizen’s Advice reports on rising debt issues

Officials from Citizen’s Advice Scotland have recently commented on the rising issues relating to debt amongst consumers that are contacting the service. Read more

Tags: day, Citizen Advice Bureau, relationship, consumer debt, business, credit, debt problems, biggest issue

Slowdown in rate of firms going bust

A recently released report has shown that the rate of firms that are going bust in the UK has been slowing down. Read more

Tags: crisis, british companies, uk, level, cash, company, company liquidations

OFT Slates Loan Company

The UK watchdog, the Office of Fair Trading, has recently slated a well known loans company that specialises in lending to those that have damaged credit and are unable to find traditional finance from regular High Street banks. Read more

Tags: office of fair trading, circles, company, fact, yes loans

Possible lower deposits for first time buyers

It has been claimed that many first time buyers could find that they are able to get mortgages with lower deposits over the course of this summer, following a turbulent period where lenders have been demanding sky-high deposits that first time buyers simply cannot afford, which has further impacted on the downfall of the property market. Read more

Tags: low deposit mortgages, deposit, credit, economics, previous property, downfall, first time buyers

Economic recovery depends partly on continued lending

The deputy governor of the Bank of England, Paul Tucker, has recently spoken out about the future of the UK’s economy, and has stated that in his opinion the future of the economy partly depends on continued credit being extended by lenders. Read more

Tags: availability, lenders, course, credit, economic recovery, personal finance, Loans

HSBC’s £1bn boost to first time buyer market

HSBC has allocated £1 billion to a new 90% loan to value product which it is hoped will give a much needed boost to the first time buyer market. Read more

Tags: support, leading the way, United Kingdom, deposit, Mortgages, hsbc, credit, first time buyer

Credit crunch results in loss of sleep for many

A recent report has suggested that the effects of the ongoing global credit crunch is resulting in many of us losing sleep through worries over our finances and our futures. Read more

Tags: half, worse nights, heating bills, credit crunch, group, credit, age

Ways of Shopping for the Best Mortgage Deal

Due to the current recession lenders are no longer offering great deals to potential homeowners in an effort to entice them to apply for a mortgage. Read more

Tags: good financial advice, cheap mortgages, late payments, phone call, effort, credit

Low deposit mortgage numbers fall

Industry officials have reported that there has been a fall in the number of low deposit mortgages that are still on the market. This could cause huge problems for potential first time buyers, many of whom do not have much in the way of savings to put towards a deposit and none of whom have a previous property from which to take equity to put towards a deposit. Read more

Tags: Mortgages, credit, fall, none, low deposit mortgages, Real estate economics

Marked rise in repossession levels

A recent report has shown that the rise in repossession levels in the UK is resulting in around one hundred and twenty families a day being evicted from their homes. In the second quarter of this year it is said that one hundred and twenty families a day were losing their homes to repossession, which reflects a 70% rise compared to a year earlier. Furthermore, industry officials have predicted that this figure will continue to rise as the nation edges every closer to a deep recession and the global financial crisis continues to take a hold. Read more

Tags: point, economics, rate, day, base rate, credit

What happens if your airline goes bust?

Over recent weeks two airlines have spectacularly gone bust, leaving many passengers stranded and many others wondering whether they will ever see the money that they forked out for their holiday again. The global credit crunch and the soaring cost of fuel has left many budget airlines really struggling, and over recent weeks both airline Zoom and holiday firm XL have had to call it a day. Read more

Tags: money, chalk, member, date, credit, airlines, day, GBP

Are sellers becoming more realistic about house prices?

There are indications that many homeowners that are looking to sell their homes are becoming more realistic about the value of their homes, which has been reflected in a stark drop in property asking prices in the London area. Property prices have been falling for some months now, but some of the asking prices on properties indicated that many were refusing to acknowledge that their properties were falling in value. Read more

Tags: house prices, availability, summer, credit, house sales

Price of oil and food could remain high for some years

Consumers have been given a stark warning over the past couple of weeks, with officials stating that the cost of food and oil in the UK could remain high for years, which means that household finances will continue to remain strained. The warning came in a report from the government, with officials from the Treasury warning that shortage of supplies couples with growth in both population and world economy could result in many years of higher oil and food prices. Read more

Tags: Brits Food prices, whilst, higher borrowing costs, credit, today

Payday loans becoming more popular what hard up borrowers

In the past many people that were hard up and needed to raise some extra cash opted for a credit card or a loan. However, for many consumers these lines have credit have dried up over recent months, with the global credit crunch resulting in far tighter credit conditions that have left many would be borrowers out in the cold. This means that many have had to seek other ways of raising money, and this is reflected in figures that show an increase in the take up of payday loans. Read more

Tags: tighter credit conditions, limit, payday loans, doorstep lenders, credit

No change to mortgage crisis

There has been no change to the mortgage crisis in the UK despite government intervention, according to the Council of Mortgage Lenders. Officials from the CML have said that the problems in the mortgage industry are still ongoing, and the squeeze on credit and mortgages continues even though the government has pumped billions of pounds into the money market and has launched a £50 billion mortgage rescue plan that allows lenders to swap their mortgage assets for government bonds, which is aimed at restoring confidence amongst lenders and increasing liquidity in the mortgage sector. Read more

Tags: credit, mortgage lending, special liquidity scheme, bank insurance, steady decline, change, squeeze, Mortgages

People ‘to spend less on insurance’

Consumers are hoping to reduce their spending on insurance products, research suggests.

Among consumers who buy insurance through price comparison sites, 26 per cent are looking to reduce their insurance spending, according to the survey commissioned by business advisory firm Deloitte.

One-fifth of those who hope to reduce their spending on insurance aim to cut their payments on payment protection insurance (PPI), which provides coverage if the borrower is unable to make repayments on products like loans, mortgages and credit cards in the event of ill-health, unemployment or death.

David Rush, insurance partner at Deloitte, said: “At a time when households have less disposable income, it is understandable that many will look at how they can reduce their spending.

“However, consumers should think carefully about which types of insurance they most need in a down-turn.”

Mr Rush suggested that people are most likely to need PPI cover if the economy enters a difficult period.

In related news, Sainsbury’s Bank has suggested that consumers should check with their car insurance provider before they drive abroad to ensure that they are fully covered.

Tags: Credit Cards, credit, period.In related news, insurance aim, car insurance, One-fifth, comparison, need

Improve your credit rating, advises expert

People who do not have a very good credit rating should make an effort to improve it, an expert has advised.

Richard Brown, the chief executive of Moneynet.co.uk, has said that lenders will not want to give out loans to consumers who have poor credit ratings, regardless of their job or earnings.

“At the moment, lenders are only really lending money to people who are demonstrating that they can repay it, so the ground rules have changed dramatically in the last 12 months or so,” Mr Brown commented.

He advised people with poor credit ratings to make an effort to improve them by making regular repayments on loans every month and trying to pay off more than just the minimum amount.

According to Credit Action, the average amount of interest paid by each household on their total debt is about £3,790 a year, which is up by £343 from a year ago.

Tags: Credit Action, repayments, ground, debt, credit, credit rating, Loans

Graduates urged to prioritise costly debt

Graduates may have to put up with student loans but credit card debt should be paid off as quickly as possible, an expert has urged.

Richard Brown, chief executive officer of financial information website Moneynet.co.uk, remarked that university leavers have a considerable period in which to repay their student loan and should prioritise the repayment of more expensive debt first.

He explained that student debt is “a fact of life unfortunately, whereas carrying big wads of debt on a high interest credit card isn’t”.

Mr Brown made his comments after his organisation published advice to students, urging them to stop “fretting” over the amount they owe through normal student debt and to concentrate first on paying off their most expensive borrowing.

Recently published figures compiled by Credit Action showed that at the end of April, total levels of personal debt in the UK stood at £1,436 billion, an increase of £110 billion compared to 12 months previously.

Tags: expert, Student loan, debt, advice, consumer debt, information, credit

Lenders urged to tighten checks

Although consumers need to take responsibility for their borrowing, lenders must tighten their credit checking measures, an expert has urged.

Simeon Linstead, head of personal finance at price comparison website uSwitch.com, made his comments following research which showed 84 per cent of people who successfully applied for credit cards over the last 12 months did not have to provide proof of income.

This means 4.8 million people did not have to prove the details they gave in their forms, while 14 per cent of successful applicants claim they were not asked about their income and outgoings at all.

Mr Linstead remarked: “It is too early to say if the amendments to the Banking Code are resolving these problems but there is clearly an urgent need for watertight measures to be put in place to ensure that the banks are lending responsibly.”

At the end of March, various amendments were made to the Banking Code, designed to ensure new commitments to responsible lending are made by credit providers.

Tags: amendments, need, comparison, credit checking, Financial institutions, Banking, credit, outgoings

Equifax: Be ‘cautious’ about ID fraud

Consumers should be more wary of people trying to steal their identity details, an expert at Equifax has advised.

Neil Munroe, external affairs director at Equifax, said that an individual’s personal credit profile could be worth “several times more” than their maximum limit on their credit card.

According to CIFAS, the total number of fraud cases the organisation received by the end of the first quarter of 2008 was 52,286, which represented an increase of ten per cent compared with the same period in 2007.

The number of occurrences which involved a fraudster impersonating someone in order to takeover their bank account were up by 146 per cent.

Mr Monroe commented that the authorities should also make an effort to combat the issue: “There is a list of precautions that individuals should take but it’s not just an individual’s fight, it is a combined fight and the government need to be doing more around it and so do companies.”

Tags: credit, quarter, Financial services, end, authorities, first quarter, list

Getting a mortgage with bad credit

Unfortunately, over recent years we have seen a steep rise in the level of consumer debt in the UK, and as a result of this many people have found themselves struggling to keep up with repayments. This has inevitably led to missed or late repayments, and for many individuals has resulted in a reduced credit score and a tarnished credit history. Your credit rating can have a huge impact on your ability to obtain any form of credit in the future, which includes mortgages, and those with a very bad credit history may experience real difficulties when it comes to getting an affordable mortgage – or any mortgage – from a lender. Read more

Tags: tarnished credit history, interest rate, bad credit mortgages, credit, loan, rate

Payment Protection Insurance For Loans

Every year many people in the UK take out a loan in some form or another, whether it is a secured loan that is secured against the home or whether it is a contract based unsecured loan. And for most of us the thought of not being able to meet repayments on the loan one day never really crosses our minds when we are actually taking out the finance. However, there are many unforeseen circumstances that could result in the borrower being unable to meet repayments on the loan, and this could lead to severe consequences, particularly in the event that the loan is a secured one. Read more

Tags: credit, Loans, severe consequences, ppi, lender, missed repayments, contract

Interest rates ‘may drop to 4% in 2009′

Although recent predictions suggested that the Bank of England interest rate would remain unchanged, an expert has said that it could drop to four per cent in 2009.

Howard Archer, chief European and UK economist for Global Insight, said that the Bank of England will almost certainly keep interest rates at five per cent this Thursday.

Mr Archer predicted that rates are unlikely to drop before August at the earliest, however he also said that they may drop next year.

“We still believe that interest rates could eventually fall as low as four per cent in 2009, but it will be a gradual process,” he commented.

However, he also said: “The bank will want clear evidence that wage moderation is continuing and that reduced demand is undermining companies’ pricing power.”

In related news, net credit card lending rose by £100 million in April, although this was still below the increase in March, according to the bank.

Tags: gradual process, Global Insight, Pricing, bank of england, Credit card, credit card lending, credit

Homeowners facing arrears advised to speak to lenders

Homeowners who think they are getting into difficulties with their mortgage repayments should speak to their lender as soon as possible, an industry expert has advised. Read more

Tags: council of mortgage lenders, problem, credit, mortgage lending, Mr Clarke, plan

Savers ‘more cautious’

It is not only the credit crunch that is having an impact on consumer confidence, the Newcastle Building Society has said.

A number of factors, including the financial crisis affecting Northern Rock last summer, as well as uncertain stock market performance prior to that, have led to people being more cautious with their savings, according to the company’s senior marketing executive.

Steve Urwin said that these events have led to consumers moving away from investing in high-risk products.

According to research by the building society, savers are more cautious today than they were a year ago, with one in ten preferring to stash their cash under the mattress rather than put it in a savings account.

Building societies often deal with more “naturally cautious” customers, according to Mr Urwin, and the organisation has recently seen greater interest in its fixed rate bonds and Guaranteed Equity Bonds.

“Fixed rate bonds offer a guarantee of rate for a fixed period and GEBs offer stock market linked growth but with absolute capital guarantees,” explained Mr Urwin.

Tags: executive, cautious, Newcastle Building Society, organisation, financial crisis, credit, stock market

Many UK workers at ‘financial tipping point’

New research commissioned by Callcredit has revealed that 40 per cent of people in the UK would not be able to live off their savings for more than a month, rising to 53 per cent among people aged between 25 and 34-years-old.

One in four people have been forced to reduce their savings or stopped saving altogether because of the financial pressures they are facing due to the credit crunch.

Head of the credit reference agency Owen Roberts said: “Many of the UK’s workforce are at what could be described as a financial tipping point where just one unexpected unfortunate incident could have dire financial consequences.”

Mr Roberts advised people who are struggling financially to take an “active role” in sorting out their debts by reviewing their credit reports and bank statements to get a clear idea of how much they owe.

Credit Action recently warned people not to become too reliant on paying their essential household bills with credit cards.

Tags: month, finance, credit reports, Roberts advised people, credit, reference, credit reference agency

Nationwide cuts fixed-rate mortgages

Nationwide, the UK’s third largest mortgage lender, has announced it is cutting interest rates on some of its fixed-rate mortgages by 0.3 per cent. Read more

Tags: market, fixed rate mortgages, trend, com, global credit crunch, building societies, credit, interest

“Shop around online” for discounts, advises expert

A personal finance writer has advised consumers to avoid spontaneous shopping trips and impulse buys, instead saying people should “try and shop around online” to find the best discounts on a range of products.

With more people finding themselves in financial difficulty as a result of the global credit crunch, Cliff D’Arcy says they should use the internet to find bargains and “get more bang for [their] bucks”.

The comments follow research from Monolink, which found that British consumers aged between 16 to 34 years old are struggling to pay off their credit card debts as they try to keep up with their friends and lead a fashionable lifestyle.

According to the survey, 14 per cent of respondents have bought clothes on a credit card which they are still trying to clear and 13 per cent have bought a car when they still have debt on their credit card.

Shopping online can result in discounts of between 30 and 50 per cent, says Mr D’Arcy.

Tags: internet, comments follow research, credit card debt, finance, research, credit, crunch

Enquiries to IFAs increase under credit crunch

The number of consumers seeking advice from an independent financial adviser (IFA) has recently increased as people are being hit with financial difficulties due to the current credit crunch, says IFA Promotions.

Requests to the organisation for contact details of local IFAs are currently reaching about 10,000 a week and around 600,000 enquiries a year as people look for advice on how to increase returns on their money, according to chief executive David Elms.

The areas where people are seeking the help of IFAs include mortgages, property, pensions and investments, cash as an asset class and protection needs, although the popularity of these investments depends on which sector is performing well at the time.

IFAs are authorised and regulated by the FSA and offer advice on products from the whole of the marketplace in contrast to ‘tied’ advisers who can only recommend products from certain financial institutions.

Commenting on the type of people who usually seek this type of advice, Mr Elms said: “They are typically ABC1, so they’re middle-to-top rather than middle-to-bottom [income]. But the age range is 25-65, very easily split between males and females.”

Tags: week, credit, popularity, pensions and investments, promotions, local ifas, IFA Promotions.Requests

IVA not always best solutions, says expert

An individual voluntary arrangement (IVA) is not always the best solution for people facing crippling debt, according to a financial expert.

IVAs are seen as an alternative to bankruptcy, allowing people to settle their debts without damaging their credit rating to the same extent, however there are also drawbacks.

With an IVA, people are tied into paying their creditors for a period of 60 months, or five years. If they fail to make a payment, the arrangement can be withdrawn.

“Many people who take out an IVA initially go in with the intention of paying off their debts, but because it is so onerous they eventually fail anyway,” says David Kuo, head of personal finance at Fool.co.uk.

Record numbers of people are seeking help with debt concerns, with more than 215,000 new debt problems being reported in the first two months of this year, according to a new survey by Citizens Advice.

Mr Kuo noted that around 120 people are having their homes repossessed each day and that these were the most likely to be vulnerable and considering an IVA.

However, he said that in some cases it is best to declare bankruptcy from the outset.

Tags: Citizens Advice.Mr Kuo, best solutions, debt concerns, new survey, IVAs, Mr Kuo, year, credit

British turning to overpriced “payday loans,” says expert

British consumers are increasingly turning to “payday loan” providers, which offer loans at annual percentage rates (APRs) of up to 1,355.

The loans, which are popular in the US, pay customers up to £750 into their bank account with an agreement to repay the loan at the end of the month when their paycheque arrives, according to a financial expert at fool.co.uk.

However, they typically charge £25 for every £100 borrowed, rising to £31.25 if the customer fails to pay it back on payday and can reach £1,400 if a borrower does not make any payments for a year, claims the website.

“These truly ugly loans are overpriced, overused and over here. Brits are falling victim to this form of borrowing when they should be fleeing from it,” Laura Starkey, a financial expert at price comparison site fool.co.uk, told the Independent.

To survive the credit crunch icWales.co.uk advises people to cut down on car journeys to save petrol, switch their utilities supplier and change credit cards to get the most competitive rates.

Tags: price, To survive, Payday, utilities supplier, credit, Credit Cards, Credit card, comparison

Shoppers choosing cash rather than credit

Consumers are cutting back on their credit card spending and increasingly using cash to pay for their purchases, it has been claimed.

A survey of 17,000 shops conducted by the British Retail Consortium (BRC) revealed that cash was used for 60 per cent of transactions last year, up from 54 per cent in 2006.

The BRC said this shows people are concerned about spending money they do not have and want to keep tight control of their finances.

Another issue raised by the BRC is the cost that credit card companies charge retailers, which is four times the amount of a cash transaction.

Consumers are forced to pay for the extra charges as retailers pass them on through increased prices.

“There should be a lower fixed fee per transaction which actually reflects the cost of processing, so new technology brings balanced benefits to retailers, consumers and banks,” said BRC director general Stephen Robertson.

Savings expert at Scottish Widows, Anne Young, recently said that young people get into trouble due to the “proliferation of credit” that is now available to them, adding that more should be done to educate people on managing their credit.

Tags: Financial services, online shopping, Payment systems, Business Finance, scottish widows, young people, amount, credit

Personal loan costs on the up

The worsening credit crisis is pushing up the cost of taking out a ce.co.uk/loans/” target=”_self”>loan, despite cuts in the Bank of England base rate.

Moneyfacts, a financial data provider, claims that the average rate on a three year £5,000 unsecured personal loan has risen by 1.7 per cent in the past year, adding an extra £300 to the bill.

Nearly a third of personal loans taken out in the past year were for debt consolidation. A quarter of those borrowers ran into further debt, and 85 per cent of all those taking out loans were not asked to pay off existing debts by their lenders.

Worryingly, 70 per cent of loan applicants were not asked for proof of income, according to price comparison service uSwitch.com.

Mike Naylor of uSwitch.com commented: “With more than 7,716 loan repayments being missed every day and record write-offs, you might think that lenders had learnt their lesson.”

Figures released by the Bank of England last week showed that new consumer credit rose by £2.4 billion in February, compared to an increase £900 million in January.

Tags: cent, year, February, bill, comparison, crisis, finance, credit

Consumer increase care over their personal data

One of the major issues that have raised concern across the UK over recent months is that of personal data security, with many people concerned over the risk of identity theft and fraud. Read more

Tags: increase, credit, result, personal data, Revenue, bank account, recent

Identity theft victims older than fraudsters

Consumers who are victims of identity theft are older than the fraudsters they are conned by, shows new research.

Findings from CIFAS, the UK’s Fraud Prevention Service, revealed that males in their 40s are the most likely to become victims of identity fraud than any other age group.

Peter Hurst, chief executive with CIFAS, said: “While our research into fraudsters revealed that the typical fraudster seems to be getting younger, this displays a quite different picture.”

He added that the CIFAS research shows that that the more tech-savvy, younger, sections of society are more aware of the need to protect their data, and therefore take greater care.

Those in their 40s, who may be seen as more resource rich and burden light compared with younger spenders, are supposedly a particular niche group to exploit, said the service.

Instances of identity theft are thought to be on the rise with nearly 30 per cent of Brits falling victim to identity theft within the last 3 years, according to a poll of UK credit professionals, by the Credit Show.

Tags: younger spenders, Social Issues, Cifas, credit, shows new research

Consumers need to ‘understand the whole product’ when buying a credit card

Spenders need to know what they are getting when they shop for a credit card, one financial advisor has claimed.

Credit Action said consumers need to take some time and effort when choosing a credit card, just as when choosing a car.

Chris Tapp, director of Credit Action, stated that people need to understand the principle behind cards, which is to make sure that the amount borrowed on it can be paid off the following month.

“That is the way to avoid getting hit with all kinds of charges, to make sure you are only borrowing as much as you can pay back,” he said.

He added that the main thing to look for is the headline rate and to compare this rate of the interest between card providers to ensure the best deal is found.

Meanwhile, MoneyExpert.com research released at the beginning of the month shows that 3.2 million spenders own five or more credit cards and 28 per cent of us applied for more plastic last year.

Tags: headline rate, Credit Action, interest rates, choosing, Credit card, credit, financial advisor, rate

Consumers should “research the market” when looking for a mortgage

It is important for consumers to shop around when looking for a mortgage, one property expert has claimed.

According to the Council of Mortgage Lenders (CML), buyers should do all the “obvious things” when looking for a mortgage with researching the market being one of them.

Sue Anderson, a spokesperson for CML, said: “Knowing the product range that is out there is obviously important for borrowers so that they can assess whether the person who is advising them is pushing them towards a product that looks suitable for them.”

Ms Anderson added that there are a number of ways that allow you to do this, such as checking the Financial Service Authority’s comparative tables, and the range of published sources on the web from various commercial providers”

In February 2008, the CML reported that there had been a move-away from fixed-rate products as consumers became increasingly attracted to tracker products.

Meanwhile, the mortgage market has been badly affected by the credit squeeze. In October last year, Moneyfacts reported that 40 per cent of mortgage products had “disappeared”.

Tags: year, Mortgage loan, fixed rate, mortgage, credit, credit squeeze, finance

Financial education in schools needs to be practical, say experts

A “purely theoretical financial education” in schools is not enough to assist students as they need practical experience of making decisions about their money, one financial expert has claimed.

Educational charity pfeg said that students at university need to be trained in balancing a budget in class so they can work out how to balance their finances.

Alastair Mathews, director of policy for pfeg, said: “Some students have already learned something about personal finance in their business and economics work – and yet they still don’t have a clue how to manage their credit card.”

The firm added that a theoretical financial education on its own “is not a lot of help” but any subject in the curriculum could be adapted and used to teach children how to use their money.

In the Future Leaders Survey 07-08, conducted by environmental charity Forum for the Future, universities association Ucas and insurers Friends Provident, 81 per cent of respondents (taken this year’s prospective university students) claimed to be ‘very’ or ‘quite’ good an managing money.

Tags: Knowledge, something, balancing, credit, prospective university students, Provident, Alastair Mathews, personal finance

Credit card spending hits record levels

British consumer spending on credit and debit cards hit record levels during the last quarter of 2006, reveals new research.

Findings from the Association of Payment Clearing Service (APCS) showed that out of the total £91.5 billion spent during the Christmas period – an increase on the £86.6 billion spent at the same time last year – £32.3 billion was on credit cards.

Up to £2 million of this figure was spent on food and drink during December 2007, a rise of 25 per cent compared with the same period last year.

Chris Tapp, of Credit Action, a debt charity, said that as the financial squeeze on household budgets is tightened many people may start to use their credit cards to pay for shopping.

He said that, despite retailers’ sales figures being down, credit card spending has increased.

Speaking to the London Stock Exchange, he said: “This is not good news. People using their credit cards to meet their monthly bills is the first sign of a spiral of debt trouble.”

Meanwhile, Nationwide has been voted the UK’s most responsible credit card provider.

Tags: credit, research findings, consumer, food, record, increase, service, debit

Shopping around can improve “financial fitness”

Consumers can improve their “financial fitness” by shopping around for the best deals on mortgages, credit cards and insurance, claims one financial expert.

Abbey said that there is certainly more that most consumers could do to ensure their finances could be improved and looking around for a better deal could make a big difference to the amount of money paid out.

Nici Audhlam-Gardiner, head of mortgages with the company, said: “It’s all about discipline, in the same way that you can be physically disciplined if you decide to get physically fit.”

She added that it is unlikely that someone who set up a bank account ten years ago is still receiving the best interest rate on the same deal.

Looking around for different offers can make a “big difference on your month by month basis, in terms of how much you’re earning”.

According to research conducted by ICM for Abbey, 21 per cent of people renewed their home insurance without shopping around and four per cent do not have any home insurance at all.

Tags: expert, account, abbey, credit, Nici Audhlam Gardiner, head, best interest, Financial economics

Spenders need to work out their budgets

Sitting down and working out your personal budget is the best way to begin reassessing your money, according to financial experts.

The Consumer Credit Counselling Service (CCCS) said that the most accurate way of accounting for spending is to make an annual budget and then divide it by 12.

Frances Walker, spokesperson for CCCS, said: “It is also a good time to look at income maximisation; making sure you are getting all the benefits and tax credits you are entitled to. There is lots of help out there, particularly online.”

She added that consumers in need of financial advice would be better off going to a debt advice charity rather than a bank.

“With banks they may just say ‘we’ll just give you one consolidatory loan‘”, she concluded.

According to Credit Action statistics updated on January 4th 2008, the total debt for the UK stands at £1,400 billion with the average household owing £56,234.

Tags: uk, consolidatory, January, Frances Walker, CCCS

Unpaid bills put pressure on households

Household budgets are being squeezed with millions of bills going unpaid in the last six months, say financial experts.

Findings from MoneyExpert.com reveal that as many as 6.9 million bills have gone unpaid since June last year.

Sean Gardner, chief executive of MoneyExpert.com, said: “For some time we have been waiting to see how the financial squeeze would affect the average household.”

“Nearly seven million unpaid household bills is a fairly conclusive sign that we are feeling the effects,” he added.

Figures showed that out of all the bills, most people are likely to miss paying their council tax, with one in twenty admitting to having paid it late or not all in the past six months.

However, a further 1.39 million people have said they have had difficulty in meeting payments on household bills such as gas and electricity in the second half of 2007.

Meanwhile, additional research from MoneyExpert.com has revealed that up to 2.6 million consumers plan to start the New Year by transferring their credit card debts.

Tags: executive, credit, MoneyExpert.com reveal, difficulty, Household, unpaid bills

Lending to get tighter in the New Year

The effects of the credit crunch will see lenders “tightening up” and looking at minor misdemeanours which may well have been ignored in the past, claim financial experts.

Equifax has said there could be an increase in the number of loan applications in the New Year, as lenders look more carefully at a person’s payment history.

Neil Munroe, external affairs director for Equifax, said: “Any negativity that might not have been a problem in the past might rise in prominence.”

He also warned consumers that an increase in the number of applications within a short space of time can look suspect.

Repeated searches on a consumer’s history have the potential to affect a person’s credit rating.

The latest figures from Credit Action show that total consumer credit lending to individuals in October 2007 was £222 billion. This has increased 5.8 per cent in the last 12 month.

Total lending in October 2007 grew by £8.8 billion.

Tags: finance, credit, time, Credit Action, claim financial experts, equifax, personal finance, economics

Economists give views on where interest rates will go next

There was a sigh of relief across the UK earlier this week when the Bank of England announced that interest rates had been cut by 0.25% from 5.75% to 5.5%.

There are now mixed predictions with regards to what will happen with the interest rate next, with some predicting that 2008 will see another one or two interest rate cuts and others believing that the interest rate could fall as low as 4% in 2008. Financial experts from This is Money interviewed some economists to get their views.

An official from Investec stated: ‘Evidently the MPC is taking much more note of recent signs of a slowdown in the economy and its fears over the possible effects of the credit squeeze have begun to crystallize. The question obviously now is whether rates come down again and if so how quickly. The outlook is very uncertain. We are pencilling two further 25 basis-point cuts over the first half of next year.’

Roger Bootle from Deloitte and Touche stated: ‘Today’s decision by the MPC to cut interest rates from 5.75% to 5.5% is the first step in a prolonged period of monetary easing that could see rates fall very sharply. I previously thought that rates would drop to 5%, but I now think that they could eventually be cut all the way to 4%. Inflation is likely to rise further in the coming months. However, the rise in interbank interest rates means that the risk of a very sharp and prolonged economic downturn is growing by the day.’

A spokesman from Bear Stearns said: ‘We expect another cut in January, with rates to target 5% by the second quarter. UK rates should be at 4.5% by the end of 2008, possibly even lower if the downturn is more severe. This has been a cut to alleviate the credit crunch and provide a rescue remedy for growth. Lower rates should help to put a prop under the UK housing market.’

Tom Smith
10t December 2007

Tags: credit, uk, housing, bank, propert, england, rates

Credit cards can provide ‘additional protection’ against online fraud

Paying for goods worth over £100 with a credit card can provide consumers with additional protection against potential ID fraud say industry experts.

A spokesperson for Consumer Direct said: “They [consumers] can get additional protection under section 75 of the Consumer Credit Act, which makes credit card companies jointly and equally liable. It gives you extra consumer protection.”

He also advised consumers to look out for a padlock symbol on a webpage or the ‘https’ in the website title to show that the site is secure.

Customers should also maintain their security software to afford themselves more online protection and check their bank and credit card statements regularly.

In a recent review of 77 websites of financial firms the Financial Services Authority (FSA) found that a quarter of them “failed to present information in a fair, clear and not misleading way”.

The Office of Fair Trading said earlier this year that the UK internet shopping market is estimated to be worth over £21.4 billion.

Tags: Fair Trading, Business Finance, trading, credit, credit card statements, security

Investigation launched into online sale of bank account details

An investigation has been launched by the Information Commissioner after it was revealed bank account details could be purchased online.

The Times discovered more than 100 websites were selling the details of British bankers while an e-passport was also found to be on sale online.

A trafficker was also reportedly selling 30,000 credit card numbers for less than one pound each.

Richard Thomas, the Information Commissioner, has announced that an investigation will be launched into the findings by the newspaper.

He said: “We can take action against UK-based organisations that flout the Data Protection Act. If some of these websites are not UK-based we will work with our counterparts in the relevant country.”

The findings come as confidence in the government’s handling of personal data increases to ebb.

This latest furore follows the loss of two discs in the post last month of the banking details of 25 million individuals.

Tags: personal data, account, credit, banking details, uk, relevant country."The findings, handling, bank

Christmas credit card shoppers urged ’spend sensibly’

Shoppers using their credit cards to fund purchases over the festive season are advised to be cautious.

Samantha Owens, head of personal finance at Moneyfacts said that consumers should consider taking out a nought per cent purchase card if they do not have the means to pay of their balance straight away.

Meanwhile, she said, shoppers should avoid withdrawing cash on their credit cards as this will make them subject to hefty rates, adding that buying gift vouchers can sometimes count as a cash withdrawal.

“People should check with their credit card provider, because there aren’t any hard and fast rules about what is considered cash. Foreign currency, gambling and gift vouchers, some [lenders] do consider to be cash.”

She continued, saying that if shopping online and using a card, transactions will always be regarded as purchases.

Earlier this month Moneyfacts revealed that there had be 125 increases on various credit card rates and fees, with 69 cards increasing fees for cash withdrawals.

Tags: finance, christmas credit, credit card rates, shoppers, Payment card

Banks crack down on credit cards for Christmas

The amount of time allowed for one to pay off a credit card is to be cut substantially by some banks over the holiday season.

Both NatWest and the Royal Bank of Scotland have given their customers just ten days after January 2nd to pay off their balances before late payment and interest charges are levied.

The change in rules has caused an outcry from consumer groups who claim that it is a deliberate move to charge customers at the time of year when they use their credit cards the most.

A spokesman for the consumer group Which? said: “Many people will use their credit cards over the festive period and wait until they get paid in January before paying off this balance.

“But this shorter interest-free period may not give cardholders the same flexibility and many will incur charges.”

All the banks that have slashed the time given to pay off credit cards are owned by the Royal Bank of Scotland.

Tags: festive period, bank of scotland, which, credit, time, group, Many people

Shopping around for credit card deals ‘vital’

Consumers are advised that carefully considering their options is extremely important when it comes to credit card deals.

With pressure being felt on the UK economy after the credit crisis, it is “more important than ever that people should shop around”, according to Cathy Neal, senior researcher for Which?

“Even if you’ve got the best credit card today, keep checking it every two months to make sure that it still is one of the best – and switch if your card has changed significantly since you took it out,” she advised.

Shoppers would be best using their credit cards on higher cost purchases as they will have better protection, although they must also take into consideration how they are going to repay their balance, she continued.

This Christmas, 76 per cent of Brits plan to spend around the same amount or more on their gift purchases than they did last year, with average spending at £397 per person in 2006.

Meanwhile, 29 per cent confess that their financial situation is tighter this year owing to the credit squeeze.

Tags: Gift, senior researcher for Which?, shopping, plan, business, credit, protection, senior researcher

‘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

Tags: interest, purchases, cost, incentives, high

The importance of keeping your credit clean

Over the years more and more of us have become reliant on credit for the things that we need in life, whether it is a new home or a new car or whether it is to fund a wedding, and education, or even a luxury holiday.

Most of us would be lost without our credit cards, and the majority of us take the ability to be able to open a current account for granted. Yet, if you find yourself facing severe credit problems you could find all of these things impossible, leaving you to deal with a very bleak and difficult financial future.

This is why it is so important to keep your credit in good shape. Those with good credit can enjoy a far easier financial future, with access to a choice of financial services and products from a wide choice of lenders. People with good credit can get the best interest rates, making it more affordable to take out finance. Whether you are looking for a mortgage, a personal loan, a secured loan, a credit card, a store card, or any other type of finance you will find that having good credit can make a huge difference to the amount you pay on your borrowing – and whether you are even eligible to get the credit that you need.

Your credit can be affected in a number of ways. Firstly, it is important to remember that having no credit rating can be as bad as having a poor credit rating, as it means that lenders have no way of knowing whether you are going to be a viable risk when it comes to taking out finance. Therefore, it is important to kick start your credit as early on as possible. One thing that has a major effect on your credit rating is your repayment habits – those that pay their bills and debts on time, regularly, and for at least the amounts requested will enjoy a good credit rating and access to some great deals on finance.

If, however, you make regular late repayments on your financial commitments, or worse still you default on your financial obligations, you will find that your credit rating rapidly declines, and this is where you will start experiencing problems. Those with poor credit will find that their access to finance is greatly reduced, and many lenders will not take risks on those with damaged credit, particularly in the current economic climate. Those with very bad credit may find that they cannot get any form of unsecured finance, and will have to rely on credit that is secured against their homes – even then the interest rates charged are likely to be very high.

There are other factors that can adversely affect your credit, such as fraudulent activity, out of date information, or mistakes on your credit file. This is why it is advisable to order a copy of your credit report on a regular basis and checking through the information on the file. You may find that there are mistakes and inaccuracies that could having an adverse effect on your credit, out of date information that needs to be updated, or even suspicious transactions that could result in your credit rating taking a knock. If you pick up on anything like this you should contact the credit reporting agency as early on as possible to get it rectified.

You should also bear in mind that a log is made on your credit file each time you apply for finance, and the more rejected finance applications that are logged onto your file the more your credit rating will suffer. Therefore if you are turned down for finance you should resist the temptation to keep on making applications. Instead, try and find out what may have affected the lender’s decision by going through your credit report, and wait at least three months before you make another application.

Related articles:

• How To Build Up a Good Credit Rating
• Credit Building Tactics

External links:

• Credit Reports
  Every time a customer applies for a financial product such as a credit card, the credit company will consult that customer’s credit file. This file records all their financial activity in terms of credit applications and banking activity.
• Credit Cards Designed To Improve Your Credit
  Credit cards have become very popular over the years because of the ease, convenience, and flexibility that they provide, and these days there are many different types of credit card available
• Applying For Credit Cards When You Have Bad Credit
  For those with a poor credit score, getting a credit card is harder. However, there are solutions and we will discuss and offer these in the article.
• Using Your Credit Card To Build Credit History
  Let’s say you want to buy a house, but you need to get a mortgage to help pay for the house. However, you have no credit history to speak of, so how can you apply for the mortgage to get your dream home?

Tags: Loans, secured, poor, personal, credit, build, debt

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

Tags: cards, Loans, cost, credit, ppi, finance

Organising your spending money when going abroad

When you are jetting off abroad there is a great deal to try and think about and organise – it can be easy to forget about something as simple yet important as sorting out your spending money.

However, it is important to organise your spending money properly when going abroad, otherwise you could face security issues or costly charges that could put the dampeners on your holiday. It is best not to rely on any one particular source for your spending, and there are a number of options that you should look at to fund your spending whilst on holiday.

Most people benefit from taking a combination of cash and traveller’s cheques when going on holiday in order to ensure that they increase security for themselves. It is a good idea to take a credit card along as well for emergencies. If you take just cash on holiday with you and your money then gets lost or stolen, you could find yourself without any comeback, and you could be stranded without any money of means of paying for anything. This is why it is important to take a smaller amount of cash rather than relying solely on cash for your holiday spending.

Of course it is important to take a small amount of cash. This includes English currency for when you are travelling to and from the airport or departure point, and for any purchases you may want to make whilst at the airport/ferry port/departure point. You should also take a small amount of cash in the currency used in the destination to which you are travelling for things such as cab fares when you arrive and any smaller purchases you may wish to make on your first day before you have got yourself organized.

Most people prefer to take the bulk of their spending money in the form of traveller’s cheques, which are available from banks, post offices, and other foreign currency providers. You can get traveller’s cheques in Sterling as well as in other currencies. Although it can take a little longer to make a purchase using a traveller’s cheque instead of cash, you have the added security that you can quickly get your cheques replaced in the event that they are stolen or lost, although you should remember to note down the cheque numbers and the contact details for replacement sot that you have these details to hand whilst you are away.

Taking a credit card along for emergencies is another good idea. However, if possible you should avoid using your card unless you really have to, as you could find that the charges imposed by credit card companies for each transaction made can quickly add up, and you could have a shock when your statement comes through. In particular you should avoid using your card to make cash withdrawals whilst abroad, as the combined charges for making even one withdrawal a day can be very high.

Be careful about becoming the victim of credit card or debit card fraud whilst abroad, as recent reports have suggested that Brits have seen a rise in card fraud whilst abroad. Always be vigilant when you do use your card, and if your card goes missing make sure that you report it right away so that the account can be frozen to minimise on any fraudulent transactions or theft carried out using your card.

Tags: cards, credit, money, abroad, cash

Credit card protection ‘important’

Consumers who use credit cards on a regular basis should look to take out payment protection insurance (PPI), it has been advised.

Shane Craig, managing director of Paymentcare.co.uk, has suggested that PPI can be as important for credit cards as it is for personal loans.

He acknowledged that currently more people were taking out PPI for loans because the amounts were often higher than the average credit card balance.

However Mr Craig advised: “For people who tend to max up their credit cards, protection is just as important.”

“With credit cards being the most expensive way of borrowing money, the cumulative effects of not being able to make your repayments are punitive,” he added.

Mr Craig went on to confirm that payment protection on any borrowing was something to consider because events such as job loss and illness can come completely out of the blue.

In December 2005, 47 per cent of consumers had unsecured borrowing of £10,000 or more. The average household owes £7,650 and the overall British consumer debt is £1.3 trillion not counting mortgages.

Tags: december, payment protection insurance, credit, repayments, borrowing money

ICICI to expand in UK

Indian bank ICICI is planning to expand its operations in the UK, offering consumers the chance to take out personal loans, current accounts, and insurance services.

The bank is planning to expand its services over the next year. In addition to expanding operations the company has stated that it will also improve on the time it takes to respond to customer queries, which currently takes between 24-48 hours.

ICICI is a subsidiary of the second largest bank in India, and was established in 2003. It has enabled consumers in the UK to enjoy excellent rates on savings accounts, and due to its high rates on savings has gained popularity amongst consumers in the UK. However, one thing that has gone against the bank is that many consumers have never heard of it and therefore have avoided it despite the high rates of interest offered on its HiSave Account.

Until recently the bank had refused to sign up to the Banking Code in the UK, and consumers were concerned about this as well as the bank’s reputation when it came to dealing with customer complaints and queries. One official from ICICI stated that the reason that it had not signed up to the Banking Code previously was because its bank cards were not yet chip and pin compliant.

One official from the bank stated: ‘The major obstacle was that our cards weren’t compliant. Customers can now change their pin numbers as they like and, as our systems have become more automated, we have cut down on the time it takes to open a new account to bring it in line with the industry average.’

Alan Wright
15th November 2007

Tags: personal, indian, Loans, bank, icici, current, account

King advised Darling not to lend to Lloyds

The Governor of the Bank of England Mervyn King has spoken out about his advice to the Chancellor of the Exchequer with regards to a loan request from banking giant Lloyds TSB.

The high street bank had approached the Bank of England for a loan to the tune of £30 billion in order to fund the takeover of Northern Rock. However, the governor advised the chancellor not to authorize the loan, which Lloyds wanted to take out over two years at competitive rates.

According to Mr King he told Darling that the Bank of England should not be providing loans to a company in order to allow the takeover of another company.

Speaking on Radio 4 Mr King stated: “I said to the chancellor: ‘This is not something which a central bank can do. They don’t normally finance takeovers by one company for another, let alone to the tune of £30bn, which is rather a large amount of money’.”

When speaking on Radio 4 Mr King also added that it could take months before banks get back to normal following the effects of the credit crunch.

He stated: “I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we’re going in the right direction.”

He also added: “There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities, but to some extent there are always risks, there are always fragilities. What I would say is that the situation now is, in my view, different from that in August, though it’s not without risk.”

Tom Smith
15th November 2007

Tags: england, credit, crunch, lloyds, bank, northern, darling, Banking, rock

Financial regulators are ’sleeping on the job’

A debt charity in the UK has accused financial regulators of being ‘asleep on the job’ stating that many consumers in the UK are being pushed into soaring levels of debt by irresponsible lender but that regulators are failing to take the necessary action.

According to officials from the Citizen’s Advice Bureau, which deals with many debt related issues, there have been over 1.7 million debt related issues to be dealt with by the bureau over the past year, which reflects a rise of 20% on the previous year.

Officials state that although the CAB is doing all that it can to help consumers deal with their debt related issues, it is up to financial regulators to try and tackle irresponsible lending in order to tackle soaring debt levels. The charity is currently embarking upon a conference to help consumers to deal more effectively with money issues, and this problem has been highlighted as part of the conference.

One CAB official stated: “Time and time again, we come across people in desperate straits who need not be there if the firm who lent them money had acted responsibly on day one. And while some regulators have taken action on scandals like the mis-selling of payment protection insurance, others seem to be asleep on the job.”

The Cab says that rising debt is one of the major issues facing the economy and that action must be taken by the financial services industry to combat the problem.

According to recent data spending on plastic has rocketed by nearly 50% since 2002, and in 2006 Brits spent around £511 billion on credit, debit, and store cards. However, figures from the Bank of England show that there has been a steady decline in the amount owed on credit cards since the start of 2006.

Alan Wright
14th November 2007

Tags: debt, plastic, credit, finance, cards

Competition Commission still investigating PPI

The controversy over payment protection insurance has been going on for some time now, and regulators have been investigating the problems surrounding the sale of PPI after it was found that many consumers were being mis-sold this insurance, and that in some cases the cost of PPI was higher than the interest costs on a loan.

The Competition Commission has stated that its investigation into PPI is still ongoing as no conclusions have yet been reached.

The Competition Commission has stated that the issues that are being considered are complex and therefore more time and consideration is required. The Competition Commission plans to publish its provisional findings in May of next year. The chairman of the inquiry stated that the Competition Commission had already reviewed a substantial amount of evidence, but added that there were areas that needed to be looked into further.

The chairman stated: “We are far from making up our minds. But we are focussing on the amount of competition for PPI that distributors face at the retail level.”

He added that the Competition Commission was aiming to complete the inquiry as soon as possible but had to take into consideration areas that needed to be looked at further. He said: “…we are also conscious that the issues we are deciding upon are by no means simple and it is vital that we carry out our work thoroughly, ensuring that all parties receive a fair hearing.”

A number of issues relating to PPI are being looked into by the Competition Commission. This form of cover is designed to protect against falling behind on repayments on loans, credit cards, and other forms of finance.

Alan Wright
13th November 2007

Tags: competition, payment, cards, commission, Mortgages, ppi, Loans, finance

Switching and saving is easier than ever

There are many different ways to try and save money on your monthly outgoings these days. You can go through your income and expenditure, and try and cut back on luxuries and money spent on social events. You can also go through and cancel any unused subscriptions, such as gym or magazine subscriptions that you don’t really make use of. Read more

Tags: cards, pet, Loans, gas, Utilities, home, electricity, car

Using the Internet to find affordable finance

There are many different types of finance available these days for those with good credit and those that own their own homes. Read more

Tags: online, finance, credit, borrow, Loans, cards, repayments, good, internet

Loans ‘good’ for debt consolidation if used wisely

People considering taking out a personal loa as a means to manage their finances are advised it is sensible if done sagely.

According to Moneyextra.com, if consumers are going to use this means to tame their finances, they must be careful not to build up debt on an overdraft or credit card at the same time.

Robin Amlot, senior editor at the financial services company, explained that debt consolidation is the “key reason” people chose to take out personal loans these days.

He advised a course of action for those doing so, saying: “Two key factors about taking out an unsecured personal loan as a way of consolidating your debts is that you are fixing your interest rate – so you know what you’ll be paying each month – and you are fixing a date in the future at which you will have cleared the debt.”

Recent research by Thomas Charles debt consultancy in association with YouGov found that 15 per cent of people in Britain are in serious debt, with men being more indebted than women overall.

Meanwhile, one in four Britons plan to avoid spending money on credit cards this Christmas.

Tags: debts, personal, debt, consolidation, card, Loans, credit

Credit cards hit by widespread rate increases

Over 120 increases in rates and fees have hit the UK’s credit cardmarket.

According to Moneyfacts.co.uk, in the past two months, cards have felt the indirect impact of the sub-prime mortgage crisis that has led to a global credit squeeze and resulted in rising charges.

The website’s research has found that cash withdrawal fees have increased on 69 cards, 25 now have higher rates on cash withdrawals and foreign usage charges have spiralled on 18 cards.

Esther James, credit card analyst at the website, said: “Following a year of rising rates and fees, its time to take a look at your card. Check the interest rate you are paying, as there are still some great 0 per cent deals on purchases and balance transfers to be found.

“So don’t pay interest unnecessarily. Make sure you look after your own pocket instead of fuelling the profits of the card providers.”

She added that there is enough choice for consumers not to be caught out, with 300 credit card providers on the market.

Tags: credit, increase, rates, apr, interest

FSA to publish new PPI guidelines

The UK’s financial regulator, the Financial Services Authority, is to publish new guidelines in relation to Payment Protection Insurance on its website next year.

Payment Protection Insurance, or PPI, has been at the centre of controversy over the past year, with many claims that this type of insurance was being forced onto borrowers, mis-sold, and in some cases added onto finance deals without the consumers even knowing about it. Banks and lenders make a lot of profit on the sale of PPI, but in many cases customers end up with expensive policies that they cannot even benefit from.

Payment Protection Insurance is designed to help those taking out finance, such as credit cards, loans, and other forms of credit. The idea behind the cover is that consumers will be covered for a specified period in the event that they are unable to work and therefore make repayments due to redundancy, illness, or accidents. However, research was carried out by various agencies, and the industry came under severe criticism for the inappropriate sale of policies amongst other things.

Many people have ended up purchasing PPI that is not suited to their needs as a result of this mis-selling, and the FSA aims to steer customers towards suitable plans based on their needs via the website. Customers will be asked a number of questions on the site, and will then be able to view a choice of suitable policies so that they do not end up purchasing inappropriate PPI.

In addition to helping consumers to find the right PPI policies for their needs, the FSA has also promised that it will be taking far more stringent action and imposing far higher fines on companies that are found to be mis-selling Payment Protection Insurance in the future.

Tom Smith
4th November 2007

Tags: fsa, Loans, misselling, finance, protection, payment, credit

People advised to stick to credit purposes

Consumers should use financial products for their “right purposes”, according to Sainsbury’s Bank.

Steve Baillie, head of loans at the bank, explained that using personal loans, credit cards and overdrafts for the correct purposes will help consumers avoid getting into debt without “anything to show for it”.

“Buying cars with overdrafts or buying cars on credit cards can be very expensive business if you look at the APR. And also, you’ve got to look at the lifetime value of the product that you’re buying,” he said.

Purchases with a short life over a long period should not be considered, he continued, before urging consumers to do their “research” in advance of taking on any new commintments.

Credit Action revealed that in September this year total spending grew by £11.2 billion, while secured lending was up by £9.8 billion in the month.

Similarly, there was total growth over the month in consumer credit lending to £1.4 billion.

Tags: Unsecured debt, consumer, Steve Baillie, right purposes, overdraft, long period, credit

Negative payment ‘fiddling’ widespread

Recent research shows that a staggering 296 out of 300 credit card providers use a negative payment hierarchy.

According to Fool.co.uk, 99 per cent of people with a regular balance on credit cards with varying interest rates on debts are being ripped off by their provider.

“It is not illegal to fiddle with the order in which payments are allocated on credit cards. But negative payment hierarchy is a devious way to exploit customers’ inexperience,” said David Kuo, head of personal finance at the finance site.

“Our study shows that whilst the vast majority of card providers employ this sly practice, Nationwide and Saga should be applauded for their use of ‘positive’ payment hierarchy,” he added.

Those particularly at risk from negative equity payments are people using zero per cent credit cards for balance transfer as well as purchases and cash withdrawals.

Repayments made on the card will then go towards pay off debts with the cheapest interest first, while debts with heavier interest are left to stack up interest charges and earn the provider money at the cost of the card holder.

Nationwide have revealed that consumers could pay an estimated £500 million on interest without knowing before banks are required to outline the order in which payments are made next year.

Tags: negative equity payments, money, inexperience, repayments, hierarchy, credit, economics, pay

Tracker rate deals gaining popularity

Fear over the fate of the UK property market has led to a significant increase in tracker rate mortgage interest.

According to GE Money, tracker and discount products are set to account for a third of all broker business, representing a 120 per cent increase from the last quarter.

The changes results from the fact that 89 per cent of mortgage brokers believe that interest rates have peaked, with nearly half anticipating a fall in the base rate in the next few months.

Subsequently, brokers are increasingly recommending discount and tracker products over longer fixed rate deals.

Gerry Bell, head of mortgage marketing at GE Money home lending, said: “Consumers and brokers alike have clearly been concerned by the recent stress in the financial sector and our research indicates that the market is now being boosted by a possible decrease in interest rates in the coming months.

“This will also be welcome news to those homeowners currently coming to the end of a fixed rate product who are concerned about re-mortgage products and rates that will be available to them.”

The UK markets have felt the far-reaching impact of the sub-prime mortgage crisis afflicting the US this year that has led to worldwide credit squeeze.

Tags: research, cent, welcome news, crisis, interest rates, Mortgage broker, mortgage, credit

Debt advisers expecting flood of enquiries

According to a recent report debt advisers across the UK are gearing themselves up for a flood of debt related enquiries as thousands of fixed rate mortgage deals come to an end. Many consumers across the UK took out fixed rate deals in 2005 for a two year period, with a low fixed rate of under 4.5% in many cases.
However, since that time interest rates have rocketed, with a series of five interest rate hikes in the space of a year, taking the rate up to 5.75%.

The credit crunch that was sparked in the United States sub-prime sectors has also had global repercussions, and has resulted in some lenders hiking up their mortgage rates even further. This means that the thousands of people that will be coming out of their fixed rate deals will not only face a huge rise in their interest rates and mortgage repayments, but will also find it increasingly difficult to remortgage to a more competitive deal.

Even those that switch to another fixed rate will have to fix at a far higher rate than they did in 2005, which means a huge rise in their monthly repayments.

It is thought that in the coming months around twelve thousand homeowners will see their fixed rate periods come to an end, and will face repayment rises of 40%. This means that many will have to find hundreds of pounds extra each month in order to continue with repayments on their mortgages, and this could send many households into the red, tipping them over the financial edge and leaving them facing repossession.

All homeowners that are due to come out of their fixed rate deals will face these problems, with many lenders having hiked up their standard variable rates to 8% or more. However, sub-prime borrowers will face severe affordability problems, as many sub-prime lenders have increased their rates to beyond 10% according to some experts.

It is thought that both the level of debt enquiries and the level of repossession will increase over the coming months as a result of this situation. The Consumer Credit Counselling Service has announced that it is opening a specialist repossession advice centre to deal with the severity of the situation.

Tom Smith
25th October 2007

Tags: consumer, advisors, rate, fixed, introductory, Loans, credit, end, deals

Blocked spending on credit cards problematic

Young travellers who take a parent’s credit card with them on their travels are finding it blocked for appearing fraudulent, gapyear.com has said.

Backpackers are often found to be spending abroad while their parents are simultaneously carrying out transactions on a copy of the same card at home which can lead to the provider stopping the card.

Tom Griffiths, founder of the travel website, said: “Because they visit a few countries in a limited amount of time, it looks like fraudulent behaviour.

“And, if they’re away from home, the credit card company tries to contact them but obviously they’re inaccessible, so their cards are being blocked. That’s a big problem at the moment [for] backpackers.”

He added that many parents give their children a credit card for cases of emergency as their “biggest fear” is them finding themselves without “access to cash” while away from home.

Furthermore, he said, there is now a specialised card coming in for backpackers and gap year travellers that is prepaid and allows transactions with no risk of blocking. It also removes the common problem building up “uncontrollable debt”.

According to gapyear.com 230,000 people take a gap year between the ages of 18 and 24, spending an average of £3-4,000.

Tags: Credit Cards, fear, Parent, credit, card.tom griffiths, amount, copy, Credit card

Families reign in their borrowing

Families with mortgages are taking measures to limit their debt, according to one industry expert.

Alliance and Leicester said that this demographic group is reducing the amount they spend on credit cards and cutting back on savings in order to take control of their debts.

The company puts this to consistent rises in the interest rate which now stands at 5.75 per cent and does not look like increasing further.

Sean Murphy, director of strategic planning at Alliance & Leicester, said: “Even though average interest rates on unsecured borrowings have actually fallen over the last 12 months, that has not been enough to tempt mortgage borrowers to take on more unsecured debt.

“Their family budgets have been under pressure and they have cut their cloth accordingly.”

Alliance and Leicester’s Borrowing Monitor showed that it is mortgage borrowers in particular that made cuts to borrowing with their rates falling while other groups’ borrowing rates saw “modest growth”.

Mr Murphy concluded that the base rate likely to see downward movements in the future, “some welcome comfort” would come to families with mortgages.

Tags: family, credit, order, rate, reign, base

Credit card companies ‘exploit customers’

Many credit card providers are using the order of repayment to make extra money out of the customer, new research has found.

When users are paying off debt in small repayments, card companies are directing the money to paying off the cheapest debt first meaning that they can continue to collect money on debts with high interest rates, according to MoneyExpert.com.

The website claims over three quarters of credit card companies employ this tactic which can significantly “sting” a customer who is generally unaware of the order of payments rules.

It found that 76 per cent of credit cards clear cash withdrawals debts last, and with average interest rates at 23.96 per cent on them, it can prove unnecessarily expensive for customers.

Chief executive of the company, Sean Gardner, advised: “As with all credit card deals you need to check that the card you’re using is suited to your requirements.

“If you do want to use your card for cash withdrawals or purchases there are some cards that’ll help you pay those off first to help you avoid prolonging the interest incurred. But those are few and far between.”

Further information about finding the right credit card provider can be found on market comparison sites such as nationsfinance.co.uk.

Tags: credit card providers, comparison, credit, debts, company, business

Students need to be more careful over getting into debt

According to a recent report the level of student debt in the UK is on the up, with many students graduating from university having racked up huge levels of debt along the way.

One credit reference agency is now urging students to think very carefully before getting themselves into debt, and to ensure that when they do take out credit cards and loans that they use the money sensibly and for necessities, and they make the repayments sensibly and on time.

Melanie Mitchley, an industry expert from the firm Call Credit has stated that students need to be mindful of the effects of getting into debt, and need to be careful about building up debt. She stated that new students need to manage their finance more sensibly, and need to keep on eye on their finances.

According to Barclay’s figures former students have been graduating with debts that are in excess of £13,000 on average. Another survey into student debt indicates that students could soon be graduating with average debts of around £20,000.

Ms Mitchley stated: “We are urging all students whether freshers or in their final year to be aware of the potential pitfalls if they don’t take control of their financial affairs. Our experience has shown that taking on credit needn’t be a problem if you manage your finances well and ensure you keep up your repayment.”

Another survey carried out by the Halifax showed that credit cards, overdrafts, and loan were amongst the most common forms of debts for students, with 43% of students surveyed having borrowed on credit cards, 73% using an overdraft facility, and 83% having taken out a loan.

One Halifax spokesperson stated: “These are significant sums for anyone, let alone someone who is not yet working full-time.”

Tom Smith
5th September 2007

Tags: debt, Loans, student, cards, credit, repayments, owe, interest

Sainsbury’s increases interest free period on credit cards

The supermarket giant Sainsbury’s has been offering a range of financial products and services over the years, including some very competitive deals on credit cards.

According to recent reports the retail giant has now announced that its credit cards – which already offered an attractive ten months interest free credit on purchases – will now be offering an increased interest free period of twelve months, which is likely to attract increased custom as well as placing the cards amongst the top of the best buy tables.

Officials from Moneyfacts have stated that the cards are all the more attractive because they also offer a low rate life of balance transfer facility, so in addition to enjoy twelve months of interest free credit on purchases customers can also transfer costly existing credit card balances and enjoy a low rate of interest for the life of the transferred balance – the rate currently stands at 5.94%. The standard variable rate on the credit cards is 15.9%.

One official from Moneyfacts stated: “The standard and platinum deals were already competitive, but extending its offer to 12 months pushes its standard card to hold joint top position of the moneyfacts’ best buys, along with Halifax and HSBC, with all three offering a standard revert to rate of 15.9% APR. The Platinum card offer is market leading, with the next best interest free offer at 11 months. These cards also come with the added benefit of a lifetime balance transfer deal at 5.94% pa, which in today’s market is a pretty competitive. Combined with the 0% offer, these deals are a very attractive overall package.” 

She added that the Sainsbury’s credit cards were now looked upon as a five star deal, as they offered savings on both transferred balanced and purchases, making them great value and convenient.

Tom Smith
5th September 2007

Tags: increased, platinum, introductory, purchases, card, credit, sainsburys

Parents forking out for offspring debt

Some 7.5 million parents are having to financially support their adult children, new research has found.

A MoneyExpert survey found that 40 per cent of parents with adult children have to help out with debt problems, with some £2,540 being paid per family on average.

Mobile phone bills and car finance were the most popular debt types that 24 per cent of parents have helped to cover the cost of, closely followed on 23 per cent by credit card bills.

Overdraft finances on 20 per cent and student loan debts on 15 per cent also featured as the fourth and fifth most common types of debt.

MoneyExpert chief executive Sean Gardner commented that the figures reveal that child expenditure is now a financial burden for many parents even when their kids reach adulthood.

“With the cost of living so high at the moment and with so many people living a buy-now-pay-later lifestyle, parents are often forced to help out with their children financially in later life,” he added.

Recent statistics from the debt charity Credit Action reveal that the average graduate debt for adults under the age of 30 is £12,363, but the figure represents both a decrease of £889 on 2006 and the first drop in graduate debt for six years.

Tags: Financial services, graduate debt, credit, Student loan, adult, adult children, Parent, Credit card

Barclays now offers travel cards

With millions of Brits heading off on their summer holidays abroad, one major consideration is how to deal with taking money abroad.

Some people rely on cash and traveller’s cheques for spending abroad, whereas others prefer the convenience of credit and debit cards, despite the security risks associated with using your plastic abroad. However, there could be a safer alternative available, that combines easy and convenience with increased security.

Pre pay travel cards are available for consumers that want the ease and security of having a card rather than cash when they go abroad, yet do not want to risk loss or theft of their regular credit and debit cards. These cards are also useful for those that want to ensure that they do no spend more than they have budgeted for when they go abroad. Like a pre pay phone, these cards can be loaded with cash before you go on your holidays, and can be used up to the amount that you have loaded onto the card.

Barclays has now decided to offer travel cards to customers, which will be free to obtain and load with cash. However, ATM withdrawals will be charged at 2%, with a minimum £1.50 charge, and there will be a 2.75% conversion fee if it is in a different currency. A Barclay’s spokesman stated: ‘Pre-pay cards are safer than cash and more flexible than travellers’ cheques. Furthermore it helps holidaymakers budget for the spending on their trip by not allowing them to spend more than the balance on their card.’ 

There are travel cards available from other providers as well, and these are the Post Office, which charges a flat fee of £10 for the card and for loading, and from Travelex, which charges 2% of the amount being loaded onto the card with a minimum fee of £10.

Tom Smith
17th September 2007

Tags: cards, travel, travelex, rewards, fee, spend, credit

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