Banks moving ahead of overdraft charges ruling

Banks have made a move to reduce overdraft charges ahead of the High Court ruling over unauthorised customer fees, according to new research.

Findings from MoneyExpert showed that the average unauthorised charge has dropped by five per cent over the past year, decreasing to 20.01 per cent compared with 25.25 per cent.

Sean Gardner, chief executive with finance experts, said that the current account market is changing very rapidly.

“It is encouraging that average unauthorised overdraft rates have dropped by five per cent in the past year. That said though a 20 per cent rate is still very high and well above the average standard credit card rate,” he said.

An estimated nine providers, including Northern Rock, still charge customers 29 per cent on going into the red.

According to MoneyExpert, a further 52 out of 136 accounts from 27 providers charge more than 25 per cent on their overdraft facilities.

Meanwhile, analysis from the financial experts showed that customers who insist on a passbook with their saving account are receiving an average of 0.5 per cent less on their cash.

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Rates for secured loans are becoming as competitive as unsecured deals

Homeowners looking for a significant cash advance can now choose from secured loan deals which are even more competitive than the average unsecured loan rate, financial experts have claimed.

According to Moneyexpert.com, the average APR on a £15,000 unsecured loan is an estimated 8.44 per cent.

However, borrowers with the option of securing the loan against their property have been able to get interest rates as low as 5.9 per cent, almost 2.5 percentage points cheaper than the average unsecured loan rate on the market for balances of £15,000.

Sean Gardner, chief executive of MoneyExpert.com, said: “Historically secured loans were seen as something of a product of last resort.”

“But these days they are far more attractive to homeowners who are looking for a competitive rate of interest,” he added.

Findings from MoneyExpert.com reveal that demand has increased for secured loans in the past six months with an 85 per cent rise in the number of applications seen in the last quarter ending in January 2008.

Meanwhile, further research from finance experts have shown that 1.39 million have switched mortgage provider for a better deal in the past six months.

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More first time buyers purchasing homes together

Increasing numbers of first time buyers are opting to buy homes as a couple rather than individually, claim independent mortgage experts.

John Charcol said that in the past, lifestyle choice and affordability have meant that there are more single first time buyers, but this figure was reversed last year with joint buyers making up half the home purchases compared with 45 per cent the previous year.

Katie Tucker, technical manager for John Charcol, said: “Buying together is a very sensible choice in terms of affordability. Not only for splitting the mortgage and the bills, but more cuddling up should save you on the heating!”

She added that increases in property value and mortgage payments with incomes remaining the same are all factors which have contributed to the buying trends.

Ms Tucker also said that more women are buying property jointly with more men taking the decision to settle down with a partner for their first home.

Meanwhile, research from MoneyExpert.com showed that as many as 1.39 million homeowners have switched their mortgage provider in the past six months.

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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.

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