Credit crunch shouldn’t affect responsible credit card users, claims expert

Credit card users who have not had difficulty in managing their finances in the past can continue using their cards despite the current economic downturn

Financial information provider Moneyfacts said that so long as people have a sensible approach to their finances, they could continue to take out personal loans, however the company also warned that transferring debts to new credit cards is becoming more difficult to do as lenders tighten their criteria.

Samantha Owens, head of personal finance at Moneyfacts, commented: “We haven’t seen the rates rising on credit cards like we have across other products just because the margins on them are so big already,” but the company calculated that they nevertheless went up by 0.2 per cent over the past year.

A Nationwide report released this month found that consumer confidence was at its lowest level since records began and a survey by YouGov revealed that six per cent of people have taken time off work as a result of worrying about their debts.

Ms Owens advises consumers to consider various options for managing their finances, including taking out a structured personal loan.

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Thousands are struggling with mortgages claims charity

Homeless charity Shelter has called for the government to do more to assist homeowners struggling to meet mortgage repayments after it revealed the number of calls it received had risen by 700 per cent.

The charity said that calls from concerned homeowners had leapt from 10,000 to 80,000 over the past 12 months.

Adam Sampson, the charity’s chief executive, said: “Shelter has seen a massive increase in people coming to us with mortgage problems, and with repossessions set to rise throughout this year we simply haven’t got the resources to help everyone.”

He added that the government needs to work with the Financial Services Authority to repair the “broken state safety net” to ensure that if people do face difficulty there is somewhere to turn for advice.

In its ‘Mortgage and Repossessions’ report Shelter also calls for new guidance to be supplied to judges in county courts so that a tougher line is taken against mortgage lenders who treat customers unfairly.

The recommendations from Shelter come after the FSA warned that as many as one million homeowners could face repossession as the economy slows down.

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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.

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Borrowers warned not to ’stretch themselves’

Consumers are advised not to “stretch themselves too far” with unsuitable mortgage products, an industry expert has said.

According to Andy Pratt, chief operating officer at Alexander Hall, doing so, whether fraudulently or accidentally, could land people in financial difficulty.

He explained: “[Sometimes] it’s a genuine mistake where they stretch themselves too far; a good mortgage broker should alert them to that by assessing their income and outgoings.”

Meanwhile, he said, there was no real cause for concern as the market “has got better and better” with the possession levels relatively steady.

According to the Council of Mortgage Lenders, in the first half of this year, 14,000 properties were taken into possession, representing 0.12 per cent of total mortgaged properties.

Alexander Hall is a UK mortgage brokers offering independent mortgage advice and helping develop the operations of the mortgage industry.

Tags: advice, Andy Pratt, difficulty, mortgage products, UK mortgage brokers, industry expert, industry