Debt affecting the lives of many students

There is little doubt that the high levels of debt that students have to get into in order to get an advanced education have affected their abilities to do many things in life. For many people that leave university with high levels of debt the next decade or more could be spent focusing on repaying the debt, with everything else having to be put onto the back burner.

A study that was recently carried out has revealed the extent to which many students are having to put their lives on hold in order to focus on their student debt after leaving university. As a double whammy, many now not only face the prospect of having to spend over a decade repaying their student debt but also face very bleak prospects of getting a high paid job because of the current climate.

Uswitch.com carried out research to show how many students are having to put their lives on hold in order to repay their student debt. Over 30 percent had been unable to start a pension when they wanted to according to the reports and nearly 50 percent had been forced to put off buying a home. Nearly 60 percent of students had been unable to save money because of their debts and close to 30 percent had delayed plans for marriage.

One industry official said: “The fact that graduates have to put their life on hold because they are knee deep in student debt is a sorry state of affairs. And as fees go up, students risk running up even bigger debts. But without a degree, getting a job in today’s stagnant market may be even harder.”

He added: “Going to university used to be the norm, but it is now becoming a catch 22. It is also worrying that students are going to university blind to the financial implications. Higher fees and lack of job prospects may be out of your control, but if university is right for you it’s more important than ever that you are as financially prepared as possible.”

Tags: Student loan, debts, Higher fees, life, study, official, Financial services

Spring bounce continues for mortgage lending

Recently released figures have suggested that the spring bounce seen in mortgage lending has continued, with the increase in mortgage lending continuing in May. According to the figures mortgage lending for the month of May was at its highest level so far this year.

The figures have been released by the British Banker’s Association, with the data showing that 36,709 mortgage loans were approved by major banks during the month of May for those that were buying a property. However, despite this encouraging data HM Revenue and Customs has released figures showing that for the past three months the number of completed property sales has remained flat.

The number of sales for May came in at 73,000, and this equates to around 1000 more than the numbers seen in March and April. These figures are higher than those seen a year ago, but are still far lower than figures from 2006, 2007, and 2008.

With regards to the increase in mortgage approvals members of the BBA have said that this is the third month in a row that mortgage approvals have increased, indicating that the spring bounce in mortgage lending is set to continue.

The BBA also said that in the current climate, with the base rate still at its record low of just 0.5 percent, many people were still focussing on paying off their debts rather than trying to save money, as they were able to save more on borrowing interest than they were able to earn on savings interest, making this a more favourable option.

David Dooks, Director of Statistics at the BBA, said: “The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.”

Tags: Mortgage loan, debts, Director of Statistics, finance, data, mortgage, borrowing, british bankers association

Store card customers to be penalised for being in credit

These days more and more people are wary of spending too much on credit, and this is why so many people have decided to cut back on spending on their credit and debit cards, which is a sensible decision given the mounting levels of personal debt in the UK. Read more

Tags: store cards, Credit Cards, debts, GBP, house of fraser

Don’t leave financial problems to get worse, says expert

People concerned about their financial situation should not simply leave the problem to get worse, warns a personal finance writer.

Cliff D’Arcy has said that tackling financial problems early will help people stay on top of their debts.

According to research by Monilink, 22 per cent of people have built up too much debt and are finding the repayments from month to month a strain.

Mr D’Arcy advises people to get in touch with their bank and credit card companies if they are facing financial problems as they may be able to freeze the interest or relax payments to allow customers to try to balance their budgets.

Another option for people who are worried about their debts is to contact a free debt counselling charity, such as the Consumer Credit Counselling Service (CCCS) or seek advice from a personal finance website.

Commenting on the help such organisations can offer, Mr D’Arcy said: “They have some very good advice written in plain English that will help you to deal with debt.”

Tags: CCCS, debts, Money Management International, Credit counseling, writer

New bank code introduced

Consumers are expected to be entitled to fairer treatment under the terms and conditions of a new banking code, it has been announced.

The new terms stipulate that spenders should contact their bank if they experience financial difficulty in a bid to make sure they work out a practical solution rather than just burying their head in the sand.

Both building societies and banks are also compelled to do more to assist customers who are struggling with debts by contacting those who may have been perceived to have fallen into financial trouble.

Angela Knight, chief executive of the British Bankers’ Association, said that the new code “gives strong commitments that banks will lend responsibly and will help customers who may be heading towards financial difficulties”

She added that the driver for change was the consultation process which shows what customers want and expect from their bank.

Meanwhile, young consumers are set to benefit from the Young People and Money scheme, set up to provide specialised debt advice.

Tags: young consumers, bank, Banking Services, Business Finance, consumers, debts, specialised debt advice

“More and more” homeowners using drawdown lifetime mortgages

Increasing numbers of homeowners are taking advantage of drawdown lifetime mortgages according to industry experts.

Intune group ltd, the subsidiary of Help the Aged which provides financial products to those aged over 50 years old, said drawdown mortgages allow the consumer to release money from property over stages.

Mark Gettinby, director of financial services of the Intune group, said: “This gives clients the peace of mind of knowing that they have funds available to them as and when they need them.”

Drawdown mortgages, among other equity release plans, are commonly used to supplement income, fund one off purchases or to pay off debts such as credit cards and mortgages to increase disposable income.

Mr Gettingby added that they especially benefit the homeowners over the age of 55.

According to research from the Safe Home Income Plans (SHIP), drawdown mortgages account for 51 per cent of all new equity release plans sold.

Further findings from SHIP found that the sale of equity release plans had increased by 15 per cent in the third quarter of 2007.

Tags: debts, ltd, Help the Aged, Aged, economics, director of financial services of the Intune group

IVAs – what are they?

An IVA is an individual Voluntary Arrangement, and has become known as the softer alternative to bankruptcy for those with high levels of unsecured debt. Read more

Tags: arrangement, iva, interest, debts, individual voluntary arrangement

Credit card users wise up to debt risk

A growing number of credit card users are becoming wise to the perils of racking up big debts.

With recent research showing that the average Brit spent a whopping £397 on Christmas presents last year, and that 76 per cent plan to spend even more this year, concerns about debt have been growing.

However, a new survey published this week shows that one in four shoppers are determined not to let the debt build up on their plastic.

The research was carried out by debt counselling service Thomas Charles.

Director James Falla told savespendborrow.co.uk: “People are starting to think: ‘what am I going to do when it comes to paying this back?’”

“They are being told that their houses aren’t rising quite so quickly in value, and I think those things are actually starting to filter through to the general public and they are thinking: ‘If I go on spending as I am, maybe I’m not going to be able to sweep it under the carpet by remortgaging, like I did before’.”

Nevertheless, while this is a positive sign, warnings were sounded earlier this week by Callcredit, which claimed that a large number of people in debt are “in denial” about their own responsibility for it.

Tags: debt, debts, cent, Brit, Credit counseling, television, filter

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

Careful product choice can save money

Making shrewd financial decisions can still save people money, even in times of tightening credit markets, according to Moneyextra.

The company has revealed that consumers can save a total of £4,225.46 every year by replacing near-worst with near-best financial product, representing a £250 increase in savings available from last year.

Mortgages were among the areas where savings could be made, despite seeing a decrease after global credit crunch, with potential annual savings at £2,586.

Robert Amlot at Moneyextra, commented: “Choosing the right mortgage can help keep your wallet healthy and make the difference between running up other debts and remaining solvent.

“The potential savings on your mortgage account for more than 61 per cent of the total savings to be made.”

He added that while personal loan rates are competitive, lenders are increasingly strict and good deals are generally only available to people with excellent credit history.

“Shopping around for the right savings products can pay dividends,” he said.

Tags: product, Robert Amlot, potential savings, near-best financial product, debts, Mortgage loan, money

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: debts, comparison, Credit Cards, Moneyexpert, company, credit, business, credit card providers

Some Brits could be in debt all of their lives

A recent report has highlighted how many consumers in the UK could be facing lifelong debts that will be with them for many decades as a result of high debt levels and low income.

Research was conducted by the Citizen’s Advice Bureau and indicated that many consumers in the UK could be facing debt for up to 77 years. This was based on the people that have been contacting the charity for assistance and advice in relation to their debts.

The debt mountain facing the UK has been the centre of concern for some years, and more and more people have been finding themselves unable to meet their financial obligations and having to find help. According the toe CAB the majority of consumers that made contact in order to get advice and help with their debts were, on average, around £13000 in debt, but were on just half of the national average income.

According to the CAB many of these consumers will face a lifetime of poverty, as they will spend many decades trying to repay their debts with a minimum income. The number of those needing advice and counselling for unsecured debts had doubled in the last eight years according to CAB officials.

David Harker, Citizens Advice chief executive, stated: “Low income, combined with badly informed and poorly understood financial decisions, are at the root of many of our clients’ debt problems. The reality is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of unpayable debt.”

The Cab is now looking to the government to put forward plans for solutions to these debt problems, such as Debt Relief Orders (DROs) which could help to ease the debt problems for those with high debt levels, low income, and nothing significant in the way of assets.

Tom Smith
28th August 2007

Tags: debts, orders, relief, spend, cab, advice

Card companies spark debt fears with repayment reductions

Minimum repayment levels of some leading credit cards are set to be reduced.

Cards providers have heavily advertised the reductions recently.

However, many in the industry are criticising the new offers, saying that the card providers might be exacerbating the UK’s debt problem.

To take an example from today’s Minimum Repayment Index from price comparison website uSwitch, M&S is reducing its repayment level from three per cent to 2.5 per cent, which might well appeal most to the ’spend today and worry tomorrow’ consumers who are currently racking up debts.

Barclaycard has also recently announced that its rate will be cut from 2.5 per cent to 2.25 per cent.

Lowest of all are lenders such as Bank of Scotland and Egg, who offer a tiny two per cent repayment rate.

Research released by Alliance & Leicester last week showed that the overall level of debt in the UK stands at an enormous £1.3 trillion, with those on lower incomes being particularly badly hit.

Tags: Financial services, lower incomes, uswitch, Index, debts, Website, today

Divorcee might lose home thanks to husbandÂ’s debts

An unpaid £3,000 debt to the Inland Revenue could force a divorcee out of her home.

The £3,000 original debt, left unpaid for decades by her former husband from whom she divorced more than 20 years, has increased to £73,000, an amount she could only afford to pay if she sells her £150,000 semi-detached house.

“This has come as a complete shock. I don’t really know anything about what’s happened in court and can’t talk about it until I talk to my solicitor,” Vivienne Avis, 52, commented.

Although she has not lived with her husband for the past 20 years, a judge ruled that Raymond’s creditors could demand the sale of the home which was home to the couple when they were living together.

“The interests of the bankrupt’s creditors outweigh all other considerations unless the circumstances of the case are exceptional,” Lord Justice Chadwick said.

Thousands of divorcees whose former spouses are in financial difficulties could be affected by the ruling, which could set a legal precedent.

“It is going to send shockwaves through people like us who believe they have legally binding divorce set bankrupt settlements only to find it is not worth the paper it is written on,” Mr Avis, who contracted the debt, concluded.

Tags: Mr Avis, husbandÂ, Creditor, debts, together."The interests, semi-detached house."This

Do You Have Enough Life Insurance?

Besides the thousands of people who do not have life insurance, many that do are actually underinsured. Many have children or family members that rely on them financially, and don’t realize their coverage is less than ideal. In the event of a death, a family has enough to cope with emotionally, without the additional worry and burden of paying any mortgage and bills. If a breadwinner dies without sufficient insurance, their family might ultimately have to sell their home, at the time when they most need to be recovering from the loss. Read more

Tags: ideal, month, life insurance cover, whole life insurance, debts

Prepared for a split?

It may be Valentine’s Day but nobody seems to have told the people at Alliance & Leicester.

The bank has today (February 14th) issued a warning to couples up and down the country, telling them not to get too carried away with their romantic feelings and take a bit of time to consider what could happen should they split up.

According to the bank, 87 per cent of couples are happy to make major joint purchases together, but just four per cent of these people have agreed what will happen to them following a split.

In addition to this, 50 per cent own a home together, while 56 per cent have joint debts. All of this, according to Alliance & Leicester, can lead to financial headaches and elongated heartache if the relationship begins to fizzle out.

“It is the tragic truth that the cost of splitting up can often last longer than the associated heartache,” said Richard Al-Dabbagh, senior personal loans manager at Alliance & Leicester, who admitted that discussing life without your current partner is “hardly romantic”.

“This research shows the huge amount of uncertainly that couples have as to who gets what,” continued Mr Al-Dabbagh.

“It seems that too many people are getting swept away in the moment and buying things jointly with no thought about what happens in the future. The financial implications of starting again after a split can be major.”

Alliance & Leicester says that the average cost of starting a new life following the end of a relationship is around £13,500.

Couples are advised to carefully consider their future finances and any difficulties that they may encounter should the worst happen.

Tags: life, major joint purchases, personal loans, debts, tragic truth, moment

How Safe Is Your Internet Bank Account?

The internet is whatever you want it to be. It is such a huge resource of information, good and bad, that whoever uses the internet will find a way to use it in the way that suits them. Read more

Tags: debts, security, internet bank accounts, online bank accounts, bank accounts, internet banking