Consumers withdrawing billions due to poor returns on savings

A recently released report has claimed that consumers in the UK have been withdrawing billions of pounds worth of savings over the first couple of months of this year, and this is because of the paltry rates of interest now being paid on many instant access and notice accounts following the dramatic cut in interest rates over the past six months. It has been revealed that in many cases savers are receiving barely above zero in terms of interest on these accounts. Read more

Tags: notice, savings rates, bank, January, angry consumers, england, building society, pensions

Five year fixed rate mortgage launched by Co-op

Consumers that are looking to take out or switch to a fixed rate mortgage may be interested to hear that the Co-op has launched a new mortgage product that is said to offer a highly competitive rate of interest.

The lender has launched a five year fixed rate mortgage deal that will be available to eligible and qualifying borrowers, and the rate set on the mortgage will be 4.49 percent.

The mortgage came onto the market in the middle of January, but in order to qualify borrowers must be able to put down a deposit of at least 40 percent. The five year fixed period means that consumers can safeguard themselves against rising interest rates for a number of years and can enjoy financial stability through having fixed repayments for a five year period.

However, with interest rates plummeting and set to fall further many may want to stick to a variable rate mortgage or wait to see if fixed rate deals come down further.

The benefits of the mortgage from the Co-op include flexibility, such as being able to overpay on your mortgage, underpay on the mortgage, or even take a payment holiday.

An official from Co-op said: “With base interest rates reaching an historic low and rates across the industry falling, this new mortgage offers customers the chance to fix in their mortgage payments at a low rate and have peace of mind that their payments will remain unchanged at this level for the next five years.”

Another industry official said: “If you’re lucky enough to have at least 40% equity in your home then this mortgage does offer a great opportunity to fix your interest rate at a low level. However, before deciding on a mortgage it’s essential to compare mortgages to find a good deal, and then speak to a mortgage broker for professional advice.”

Tags: coop, January, Co-op include flexibility, order, payments, new mortgage product, number

January – the most popular month for taking out loans

January is the most popular month in the year for consumers to take out an unsecured personal loan, claims one financial expert.

Findings from Halifax reveal that, compared with other months, almost double the number of loans are taken out during the first few weeks of the year.

According to Halifax, the percentage of loans taken out for debt consolidation also increases during January.

Neil Chandler, head of Halifax Unsecured Personal Loans, said: “For many people, the start of the year is a time to get personal finances in order – transferring debt from more expensive products such as store cards or other loans.”

The research showed that men are more likely to apply for a debt consolidation loan than women regardless of the time of year.

Consumers aged between 20 and 29 years old are the most likely to take a loan for debt consolidation purposes closely followed by those aged 30-39 years old.

Meanwhile, Halifax is working with Experian in an attempt to re-unite customers with funds held in dormant banking and saving accounts.

At the start of the campaign, in March 2007, 110,000 accounts were identified as being dormant.

Tags: taken out, January, finance, March, consumers, Unsecured loan, personal finances, expensive products

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: Frances Walker, credit, January, consolidatory, Credit counseling, uk, debt

Shop around for credit card bargains, customers urged

Credit card customers should be prepared to shop around for the best card deals this month, just as they would for anything else in the January sales.

According to Sainsbury’s Bank, credit card users need to take the new start offered by the New Year to review their finances and make sure they are getting the best deal.

“Look around and see whether there are better deals than what you’re currently getting from your provider and that may well offer you an opportunity to reassess your costs,” urged head of cards Donald MacLeod.

He urged customers to pay off more than the monthly minimum amount on their cards in order to avoid going further into debt.

Figures released by UK payments association Apacs last month suggested that 64.3 per cent of the £53 billion spent in the run up to Christmas would be put onto credit cards, with the amounts put onto plastic accelerating in the last few days.

Tags: New Year, Christmas and holiday season, card, best card deals, apacs, deal

Frost increases theft as cars left unattended

“When the icy mornings start” theft claims increase, as drivers leave their cars unattended while defrosting, say insurance experts.

The British Insurance Brokers’ Association (BIBA) says that car owners should stay with their vehicles to avoid becoming victims of this new type of car theft – “frosting”.

Graeme Trudgill, technical and corporate affairs executive at BIBA, said: “Unfortunately, gone are the days when you can leave your door open…and the same goes with your car. You do need to take security measures there.”

He added that drivers are being sensible by defrosting in the first place, as it would be dangerous to drive with only a small gap in the windscreen through which to see.

However, it could be contentious when making an insurance claim in a situation where a driver has left a vehicle unattended as insurers will argue “you haven’t taken reasonable care,” warned Mr Trudgill.

In January 2007, Sainsbury’s Bank estimated that between 2000 and 2005 as many as 121,730 households may have become victims of “frosting”.

Tags: theft, January, theft claims, Sainsbury, Financial services, corporate affairs executive, Insurance

Rejected mortgage applications rise by 60%

In the past six months the number of mortgage applications being rejected has gone up by a staggering 60 per cent.

According to recent research by MoneyExpert.com, the amount of rejections this year has risen from 463,000 between January and March to 738,000 in the last six months.

The increase reflects interest rate rises and more specific lending criteria, the website explained.

Its chief executive, Sean Gardner, commented: “Life is tough at the moment if you’re applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection.

“Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford.”

Standard and Poor rating agency told the Financial Times newspaper that the mortgage slowdown is due to a “knock” to buyer confidence after the credit squeeze.

It added that mortgage lenders might look to further tighten underwriting standards and pricing on some types of mortgages.

Tags: poor, tighten underwriting standards, financial, mortgage, slowdown, Financial Times newspaper, January

Poor home security affects insurance, Halifax says

Insurers at Halifax warned today that poor home security can invalidate claims.

According to statistics released by the insurance provider, claims for unforced burglary tend to rise hugely at this time of year, with a full 50 per cent increase in August 2006 over the figures for January of that year.

Received wisdom that the increase is caused by claimants jetting off on their holidays is also incorrect: 55 per cent of claims are made from those who occupied their home at the time of the robbery.

Open windows and doors due to the warmer weather was cited by the insurer as the main reason behind the break-ins.

Underwriting manager at Halifax Vicky Emmott said: “During the summer, we invariably see claims for unforced burglary increase dramatically, as people leave doors and windows open to keep their homes cool.

“Burglars can be in and out in seconds, so we are advising people to keep valuables out of sight, and avoid leaving doors and windows open when rooms are unoccupied, or when out in the garden.”

Other top tips offered by the insurer looking to boost their security, such as recommending that neighbourhood watch schemes be joined and that safety latches on windows be used.

National Home Security Week begins on August 25th.

Tags: Types of insurance, burglars, out of sight, January, August, manager

Credit card borrowing falls

The amount of money we borrow on credit cards fell in January, with industry experts saying this shows we are all managing our finances better.

Figures from the British Insurance Brokers’ Association (BBA) show that borrowing on credit cards fell by £0.5 billion in the first month of 2007.

This is despite increases elsewhere across the board, with mortgage lending rising by £5.6 billion and total UK lending to the private sector growing by £21.9 billion.

A lack of borrowing on credit cards is being seen as a positive sign that personal finances are being better managed by the majority of the population.

“We can see that the January sales did not encourage borrowing on credit cards,” said David Dooks, director of statistics at BBA.

“As in the second half of last year, card borrowing is contracting and, with weaker retail sales being reported, this reflects the consumer’s current attitude to spending and their commitments.”

The BBA has also revealed that levels of unsecured personal lending were unchanged in January.

Figures for mortgage lending were in line with the monthly average increases for the last six months, with Mr Dooks saying that the rise was expected.

“Mortgage lending continued to be buoyant, as we expected following the high volumes of approvals in the final quarter of last year,” he added.

Tags: credit, second half, retail sales, rise, positive sign, January, Credit Cards, january sales

Brits optimistic for 2007

January 22nd 2007 has been labelled Blue Monday, with experts calling it the unhappiest day of the year.

However, despite the bleak predictions, a major psychological study says that most Britons are optimistic about the year ahead.

The reason may surprise many, but our sense of optimism is down to a firm resolve to get a grip on our finances.

According to the Freestyle Happiness Index, which looks at the top ten ways to be happier people, Britons rate managing money above marriage, children and retirement.

“The research shows a really positive shift in attitudes towards financial management,” said Ashley Ramsay, marketing manager at Standard Life Bank.

“Whereas previously it ranked pretty low on people’s agendas, people are recognising that financial security would make them feel happier.

“While people acknowledge that money won’t buy happiness, they’re realising that it can get in the way. In fact, 70 per cent of people say that its money, not time, that’s the biggest obstacle to happiness for them,” she added.

Clearing debts was ranked as the third best way to improve our happiness, while achieving financial security was voted fourth and paying off the mortgage came in at sixth.

The number one method of improving happiness was voted as beginning a new hobby, followed by having more fun at work.

Tags: Standard Life Bank, ramsay, Positive mental attitude, rate managing money, method, money, blue monday

Separation must be financial too

January is the peak month for couples splitting up and those who find themselves in this situation are being warned to remember that financial ties remain long after the love has gone.

Research shows that couples are most likely to go their separate ways during January as the pressures of the Christmas period act as the straw that breaks the camel’s back in a relationship which is failing.

However, many people forget that although they may no longer be in an emotional relationship with their former partner, they may still be in a financial one.

MyCallcredit is warning those who have split that they should break these ties, or risk their ex having an impact on their credit file and future creditworthiness.

“Any joint credit arrangements need to be transferred into single names and joint accounts closed before an individual can disassociate themselves from their former spouse,” said Melanie Mitchley from MyCallcredit.

“If people aren’t proactive they can find their own finances affected by their ex’s future partners. And that’s something to be avoided at all costs.”

The firm says it is important that any joint credit commitments are brought to an end, which may involve taking out a new loan to pay off a previous debt.

Once this is done, the credit reference agencies should be contacted and informed that there should be no more association between you and your former partner.

“Splitting up is always difficult but it pays to take the initiative and disassociate yourself from your ex and their borrowings as soon as possible – otherwise you could be in for a nasty surprise,” added Ms Mitchley.

Tags: Separation, joint credit arrangements, Financial services, relationship, straw, commitments, January