Consumers fleeced over bill payment methods

Many people these days are keen to try and reduce their outgoings, and in the current financial climate with so many people struggling financially making cutbacks has become vital for some people. One of the ways in which many people try and cut back is through reducing their bills by doing thing such as switching providers, which can help to make significant savings.

However, one way in which many consumers are wasting millions of pounds a year between them on their bills is via their payment methods. Many people fail to realise that companies these days often charge a small fortune based on how the consumer pays their bills, and that by making a simple change to their bill payment methods they could make a significant saving.

Companies such as energy suppliers, home phone providers, and broadband providers often make additional charges to those that do not pay by direct debit. Most consumers have a number of choices when it comes to making payments on bills, such as direct debit, standing order, cheque, or in person at banks and post offices.

For those that do not pay by standing orders some companies such as broadband and utility providers apply an addition monthly or quarterly charge, which can really bump up the cost of services for the customer. For example, Virgin Media, which provides phone, television, and broadband services, will charge consumers an extra five pounds a month for failing to pay by direct debit, which equates to £60 a year. In addition to this the company charges extra when customers ask for paper bills to be sent to them.

In order to save more money on their bills consumers should set up direct debits wherever possible, as otherwise they can end up being charged a small fortune on the cost of their bills. There is also another benefit to setting up a direct debit for a bill payment, and this is because it can reduce the chance s of making a missed or late payment, which can also incur charges when the payment is on something such as a credit card or loan. These missed or late payments can also result in the consumer’s credit rating being affected, which can make it more difficult to get finance in the future and makes it more expensive to get credit due to higher interest rates charged.

Tags: finance, Standing order, way, Direct debit, debit, loan

Exercising safety when shopping online

Most of us these days have done some form of shopping online, whether it is shopping for groceries and household goods or whether it is buying gifts, entertainment, clothes, and even holidays. Shopping online has become more and more popular over recent years, with an increasing number of people choosing to enjoy the convenience, ease, and speed of shopping via the Internet. When you shop online you get to make your purchases from the comfort and privacy of your own home with no queues to worry about. You also get to enjoy incredible choice with products available from all around the world. Read more

Tags: duty charges, risks, debit, privacy, identity, online shopping

Brits prefer cards to cash

vNearly a third of British consumers use their credit cards for everyday spending, according to new research.

Findings from Fool.co.uk showed that debit cards account for over a third (37 per cent) of spending while cash accounts for over a quarter (29 per cent).

David Kuo, head of personal finance with Fool.co.uk, said that using plastic is useful but relying on money that cannot be seen is indicative of the recent reliance on credit that is apparent in our culture.

“It is more important than ever to build a decent savings pot because one day when you need to pull a rabbit out of the hat, you could find that all you have is a dead duck in your pocket,” he said.

Further results of the study showed that fewer people carry cash, with nearly half of us withdrawing money once a week or less.

Meanwhile, last week, Chris Tapp from Credit Action said that anyone looking for a new credit card should shop around to make sure that they get the best possible deal they can.

Tags: business, Credit Cards, personal finance, Electronic commerce, day, duck, debit, Brits

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

Overseas credit card fraud increases

An increase in the amount lost as a result of credit card fraud has been driven by fraud on UK cards used abroad. Read more

Tags: result, soil, UK cards, card details, losses, uk, debit, period

Are cheque payments becoming a thing of the past?

There was a time when paying for something by cheque was the norm for most people, but with the soaring popularity of credit and debit cards in the UK it seems as though cheque transactions are becoming a primitive payment method that will soon be left trailing.

This is being reflected by the number of retailers that are now turning away cheque transactions, and the latest to jump on the bandwagon of saying no to cheques is Sainsbury’s.

The supermarket giant has announced that as from the 1st August this year it will no longer be accepting cheque payments from customers. Although this does reduce the range of methods that customers can use to make payment for goods, the vast majority of customers tend to use debit cards, credit cards, or cash anyway. The no cheque rule will be applied in all 800 of the supermarket chain’s stores.

According to officials from the supermarket chain it makes sense to stop accepting cheques because so few people use them and because processing them can be time consuming. A number of other high profile retailers have also decided that they will stop accepting cheque payments, and this includes WH Smith, Morrisons, Boots, Asda, and Shell. Again, the main reasons seem to be lack of use by customers and time consumption for the companies in question.

With more and more retailers stopping cheque payments it is likely that an increasing number of transactions will now be made using credit and debit cards, which could see the number of card transactions made each year in the UK rocket even further.

Speaking about cheque use one Sainsbury’s spokesperson stated: “Like other retailers they are being used less and less by our customers.”

Tom Smith
27th August 2007

Tags: purchases, debit, credit, spend, dated, payments, cheque

How To Build Up a Good Credit Rating

It is evidently not a good thing to have a bad credit rating. For example, it can limit your borrowing options. The sorts of thing that contributes to a poor credit rating are county court judgments, defaults on payments and bankcruptcy orders. In the case of circumstances such as these, the only way to get credit (loans, mortgages) is through the sub-prime market. Here the borrower is charged high rates of interest to reflect the apparent risk to the lender.

There are two main credit reference agencies who compile credit histories on individuals. These are Equifax and Experian. They take their information from sources such as the electoral roll, county court judgments and the payment of past debts. When anyone takes out a new form of credit it will leave a record which these credit agencies also draw upon. But it is not the credit agencies who make the decision about whether to offer credit to would-be borrowers. It is the lender who makes that decision, based on the information provided by the credit agencies and their own lending criteria.

Under the Data Protection Act, if a lender refuses you credit, it must tell you why. Under the Act, if scoring was used to help the lender decide not to give you credit, then you are entitled to ask for you application to be reviewed. Even it this doesn’t help you to get credit this time, you will be able to see your rating and where it might need improvement. Or it can highlight errors that may be on your record (and they do happen) and you can try to get them rectified.

If you do have a poor credit rating, it is a good thing to work to make it better. Although bankcruptcy remains on a rating for up to six years, a year of good credit practice should return a rating to a healthy state.

To begin with, you should ensure that you pay off your creditors on time. If you do have to miss a payment, tell the creditor and make sure that you make the payment the following month.

Even simple things like making sure you are on the electoral role and completing credit application forms correctly will help to improve your rating. Agencies allow people to explain why they may have had a poor credit performance, and a ‘notice of correction’ can be attached to their report explaining, for example, whey they missed payments.

It is worth buying access to your credit history from one of the agencies to make sure that everything is in order. As an example, if you have had a county court judgment, but have since paid the debt, make sure the payment is recorded on the file. If you have had a bankcruptcy order annulled, make sure a copy of the annulment or order of discharge is sent to credit agencies.

Another way of boosting your rating is to take out a store card and pay off the balance regularly and on time. The rating can be improved quickly by opening a variety of accounts, but make sure you do pay off the debt each month. You can also ask someone you know well (family or friend) with good credit history to co-sign for a small loan or credit card. This also helps your own rating.

It is a bad idea to keep applying for credit if you have already been refused by another lender. A lot of searches on history does not work in your favour. The tip is to ask the lender if you fir the profile of people they give credit to.

Having no credit record can be as bad as having a poor credit record. So if you have no credit record, start to build one up – a good one.

More Information:

• Credit Building Tactics
• Bad Credit-Credit Cards

Tom Smith
19th June 2007

Tags: payments, direct, credit, late, build, history

Happy birthday debit card

This beginning of June marks the twentieth anniversary of the debit card in the UK.

It is difficult to imagine how the nation managed without the debit card, but until 1987 this is exactly what we did. At the beginning of June 1987 Barclays launched its Connect Card, revolutionizing the way that consumers accessed their cash. Soon bank customers everywhere were able to access their money instantly and easily, as well as being able to make purchases quickly and conveniently.

Within a year of the launch of the Barclays Connect Card, a million debit cards had been circulated in the UK, and this has steadily grown over the years with nearly seventy million debit cards now in circulation, two decades after the initial launch. According to APACS around 143 purchases per second are now made through the use of a debit card in the UK, with people paying for everything from holidays and electrical to petrol and groceries with their plastic.

Debit cards are more popular than credit cards in the UK, and 85 percent of consumers in the UK have a debit card compared to 66 percent of consumers that own a credit card. Nearly seven billion transactions each year are carried out on debit cards.

A spokesman from Barclays stated: “The massive change when debit cards were introduced was that people were able to leave their chequebooks at home. It gave people the convenience to access their current accounts anywhere in the world. It was a massive convenience for the retailer as well.”

He added: “Without payments moving to an electronic platform, internet retailing could not have taken off. The ability to make a payment accurately without having to send off a cheque has created this online channel for retailers.”

Tom Smith
12th June 200

Tags: debit, shopping, credit, pay, switch

Chip and pin is flawed

Chip and pin may not be as safe as we have been led to believe, after researchers managed to locate a weakness.

The debit and credit card payment method has long been seen as infallible, but scientists at Cambridge University have cracked the code.

They have managed to doctor a chip and pin payment machine, allowing the cardholder’s details to be transferred to a third party.

Information gained in this way could then be used to extract money from the victim’s account.

“We have used this as a way to show that the system is not infallible,” said Alan Holland, producer of BBC programme Watchdog which will feature the researchers’ findings tonight (February 6th).

“These academics are clever but there are thieves out there who are going to be equally clever but more driven.”

The exact details of how the researchers managed to crack the chip and pin system have not been released in order to prevent thieves copying the method.

Despite this set back, consumers are being assured that chip and pin is still safe and the system has not been hacked by anyone outside of the research centre.

Tags: account, weakness, Point of sale, debit, card payment method, cambridge university, producer