People who lie on insurance claims ‘will be found out’

People who try to make fraudulent claims on their insurance are likely to be caught out, according to a financial expert. Read more

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People using credit to ‘patch holes in their budgets’

With financial conditions worsening under the current credit crunch, people are increasingly turning to credit to make up any shortfalls in their budgets, Fool.co.uk has said.

David Kuo, head of personal finance at Fool.co.uk, also said that credit fraud is likely to increase as people struggle to cover their living expenses.

People are increasingly seeing their personal finances being stretched as they face bigger outgoings due to rising household expenses. At the same time, salaries have not risen fast enough to cover the increased costs, Mr Kuo said.

Capital Economics recently reported that average earnings growth is set to remain at just under four per cent a year while food inflation is expected to stay at six per cent over the coming months.

“Initially it just starts with [people] saving a little less money…the next step is [people] start raiding [their] savings in order to try and cover [their] outgoings. The third step is [people] have to use credit in order to try and patch up any holes in [their] budget,” commented Mr Kuo.

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Over £1bn to be transferred between credit cards every month

Up to £1.1 billion is expected to be transferred between credit cards every month, according to new research.

Findings from a study by Sainsbury’s Bank showed that an estimated 716,000 consumers are responsible for the transfer of the sum.

The average transfer balance is £1,500 but one in ten consumers intend to transfer plans worth £4,000.

Donald MacLeod, head of cards with Sainsbury’s, said research indicates that 40 per cent of card holders think it will take longer than a month to clear their current balance.

“Although there are a number of credit cards offering introductory 0% on balance transfers, there is a considerable difference in their duration so people need to choose carefully. Also, when choosing a card for a balance transfer, it is also worth considering what else it offers,” he added.

Meanwhile, research from Fool.co.uk showed that UK spenders are more likely to use their cards than cash when paying for everyday purchases.

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Bank customers warned to avoid fee-paying accounts

Bank customers paying fees for packaged accounts are getting very little for their money compared with customers in free accounts, according to new research.

Findings from MoneyExpert revealed that the average credit interest rate on packaged accounts is 2.1 per cent per month, only 0.2 per cent more than the average rate available through free banking.

The average monthly fee of a packaged account is £11.61, with some accounts charging as much as £25 a month.

Sean Gardner, chief executive of MoneyExpert.com, said: “The basics of a typical fee-paying current account are frankly terrible value for money.”

“You don’t have to be a mathematician to see how an average interest rate of just 2.1 per cent compares to free banking if you have to pay a typical fee of £11 for the privilege,” he added.

The figures show that over half of all packaged accounts pay less than 2.5 per cent AER on positive balances.

Meanwhile, financial experts Fool.co.uk said that there are “lots of good offers” on the bank account market due to the effects of the credit crunch.

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Inflation ‘four times higher’ than official figures

The real rate of inflation is around four times what official figures say it is, according to a new survey.

A poll by Fool.co.uk suggests that 93 per cent of people “feel” inflation as being much higher than the current 2.2 per cent claimed by the government.

In fact, the survey puts the average “felt” level of inflation at 8.1 per cent, with five per cent of people putting the figure at 15 per cent.

People in their 40s are the hardest hit age group, experiencing inflation at an average of 8.8 per cent.

David Kuo, head of personal finance at Fool.co.uk warned: “The government can boast as much as it wants about its success over controlling inflation. However, people feel inflation through the shrinking pound in their pockets; they don’t experience it through a theoretical government shopping basket.”

In particular, the basket of goods used by the government to calculate inflation omits the cost of housing and mortgages.

The effect of inflation is being felt hardest by people in the West Midlands, where the average for all people was found to be 8.8 per cent. Northern Ireland has the lowest rate of “felt” inflation, at 6.8 per cent.

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Fall in house price tempts buyers

One in ten people who intend to buy a house have brought their plans forward due to the recent price falls in the market, according to new research.

A survey by personal finance information providers Fool.co.uk has shown that 11 per cent of potential home buyers have accelerated their plans.

Out of those respondents, 38 per cent expect to move this year and one in three believe they will change their property in 2009.

David Kuo, Head of Personal Finance at Fool.co.uk, said: “The long-overdue correction in the property market will allow many people who have been waiting to move house to finally realize their dream.”

However he added that many buyers often approach the financial thinking behind purchasing a home in the wrong order.

“Quite often people will ask how much they can borrow when they want to buy a property. But that is altogether the wrong question. Instead, they should ask themselves how much they can afford to repay,” he said.

Fool.co.uk revealed that over a third of Brits spent New Year in their homes to save money.

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Millions wasted on credit card debt payments

Brits are squandering millions every year on unnecessary interest payments on their credit cards, despite also saving money for the future.

Recent research by Fool.co.uk has found that around one in every six people with an average of £450 pounds worth of credit card debt are simultaneously saving £3,000 for a “rainy day”.

British cardholders pay an average of £165 annually on interest, with an outstanding balance of £1,100 at 15 per cent. Meanwhile they are earning just £66 interest on savings accounts at six per cent.

David Kuo, head of personal finance at Fool.co.uk, commented: “We are often told to put aside money for a rainy day because having a ready source of funds for emergencies is a sensible thing to do – and it is.

“[However], saving money before you have paid off your debts is like trying to fill a bath without putting the plug in first. It’s a pointless exercise that results in a waste of water, an empty bath and hefty water bills.”

Those aged between 34 and 41 are the most likely to be saving at the same time as paying hefty interest on credit card debts.

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Polite Brits avoid money talk

Brits shy away from the “rude” topic of money in conversation, according to Fool.co.uk.

The website ran a study called Let’s Talk About Money, which showed 30 per cent on the 1,500 UK adults asked, stating that taking about money is rude as it is a personal subject that should be kept private.

As many as one in seven Brits say they are worried about what people might think of their financial situation while 16 per cent are embarrassed about their levels of debt.

Other figures show 33 per cent of respondents feeling uncomfortable about let slip how much they earn with 49 per cent thinking that nobody would be interested to know about their monetary affairs.

David Kuo, head of personal finance at Fool.co.uk, commented: “It’s a shame that when it comes to money, Brits are still stuck in the dark ages, too proud to talk about their financial situation which conforms to the typical British stereotype.

“Talking openly about money, especially with close friends and family has many benefits. Money matters can often spiral out of control if you don’t seek advice from others.”

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Homeowners ‘losing millions’ to gazumping

UK property buyers are losing up to £290 million each year through today’s ruthless house buying tactics, new figures have claimed.

Some 73 per cent homebuyers believe that gazumping, where sellers pull out after the buyer has forked out financially on particulars such as surveys, searches and lawyer’s fees, should be made illegal, a survey by Fool.co.uk has found.

The personal finance website’s study also revealed that 28 per cent of gazumping victims were left “seriously out of pocket”, while 11 per cent of homebuyers believe it is a necessary evil in the task of finding an ideal property.

Fool.co.uk has advised consumers to avoid the phenomena by taking measures such as getting their finances in place early, establishing a bond with the seller, and keeping the seller’s estate agent informed at all times about the progress of the purchase.

“While competition can often draw out the best price for a product, it can also bring out the worst in people,” the website’s head of personal finance David Kuo said.

However, a recent Building Societies Association report found that 71 per cent of current homebuyers accept that property prices could fall this year.

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