Changes to Isas will benefit consumers say experts

The changes to Isas anticipated to occur in April of this year have been welcomed by industry experts.

Robin Keyte, a director with the financial services firm Towers of Taunton, said that getting rid of the definition of mini and maxi Isas should benefit both the customer and the Inland Revenue.

The increase in the maximum amount a person is able to invest in an Isa in a tax year, from £3,000 to £3,600 should help encourage saving as well as rise in line with inflation, he added.

“You could also say that with the credit crunch digging in, it’s very timely, because people want to reduce their spending. The timing is good,” Mr Keyte said.

Removing the ‘Personal Equity Plan’ (PEP) description and treating the funds as Isas should also help simplify the situation for the consumer.

He said that there’s “no point” in keeping the name different, due to the amount of similarities between the two products.

According to figures released in November 2007 by HM Revenue and Customs, the amount of money saved in Isas has now reached £208 billion.

Tags: line, Towers, services firm towers, Personal Equity Plan, maximum, equity, personal, definition

Lost data victims desperate to protect bank accounts

The millions of victims of the HM Revenue and Customs data loss blunder have been desperately taking measures to try and protect their bank accounts according to a recent report.

HM Revenue and Customs lost disks containing around 25 million bank account details recently, and although there is nothing to suggest that the information has fallen into the wrong hands the government has urged those affected by the situation to remain vigilant in order to reduce the chance of becoming a victims of fraud or theft.

Over the past few days thousands of potential victims have been flocking to change their bank account passwords and PIN numbers in a bid to try and protect their accounts. Because the data related to child benefit and contained names and dates of birth it is thought that parents using their children’s names and dates of birth as part of their banking security details may be at most risk in the event that the data does fall into the wrong hands.

Sandra Quinn from APACS stated: ‘Obviously with the scale of this there can be no guarantee that fraud won’t happen, but we are doing all we can to minimise that risk. Our best advice is that if you use your child’s name or date of birth as passwords then it would be a good idea to change them, but there is no need to panic.’
Banks are also taking precautions to try and protect customers’ accounts.

One Barclays official stated: ‘We have briefed staff to be extra vigilant, and will be asking customers for additional information as well. Obviously we won’t say what those extra measures are, but we are asking people to bear with us, as we take all steps to minimise the risk to customers.’

Tom Smith
3rd December 2007

Tags: personal, data, stolen, bank, lost

The importance of keeping your credit clean

Over the years more and more of us have become reliant on credit for the things that we need in life, whether it is a new home or a new car or whether it is to fund a wedding, and education, or even a luxury holiday.

Most of us would be lost without our credit cards, and the majority of us take the ability to be able to open a current account for granted. Yet, if you find yourself facing severe credit problems you could find all of these things impossible, leaving you to deal with a very bleak and difficult financial future.

This is why it is so important to keep your credit in good shape. Those with good credit can enjoy a far easier financial future, with access to a choice of financial services and products from a wide choice of lenders. People with good credit can get the best interest rates, making it more affordable to take out finance. Whether you are looking for a mortgage, a personal loan, a secured loan, a credit card, a store card, or any other type of finance you will find that having good credit can make a huge difference to the amount you pay on your borrowing – and whether you are even eligible to get the credit that you need.

Your credit can be affected in a number of ways. Firstly, it is important to remember that having no credit rating can be as bad as having a poor credit rating, as it means that lenders have no way of knowing whether you are going to be a viable risk when it comes to taking out finance. Therefore, it is important to kick start your credit as early on as possible. One thing that has a major effect on your credit rating is your repayment habits – those that pay their bills and debts on time, regularly, and for at least the amounts requested will enjoy a good credit rating and access to some great deals on finance.

If, however, you make regular late repayments on your financial commitments, or worse still you default on your financial obligations, you will find that your credit rating rapidly declines, and this is where you will start experiencing problems. Those with poor credit will find that their access to finance is greatly reduced, and many lenders will not take risks on those with damaged credit, particularly in the current economic climate. Those with very bad credit may find that they cannot get any form of unsecured finance, and will have to rely on credit that is secured against their homes – even then the interest rates charged are likely to be very high.

There are other factors that can adversely affect your credit, such as fraudulent activity, out of date information, or mistakes on your credit file. This is why it is advisable to order a copy of your credit report on a regular basis and checking through the information on the file. You may find that there are mistakes and inaccuracies that could having an adverse effect on your credit, out of date information that needs to be updated, or even suspicious transactions that could result in your credit rating taking a knock. If you pick up on anything like this you should contact the credit reporting agency as early on as possible to get it rectified.

You should also bear in mind that a log is made on your credit file each time you apply for finance, and the more rejected finance applications that are logged onto your file the more your credit rating will suffer. Therefore if you are turned down for finance you should resist the temptation to keep on making applications. Instead, try and find out what may have affected the lender’s decision by going through your credit report, and wait at least three months before you make another application.

Related articles:

• How To Build Up a Good Credit Rating
• Credit Building Tactics

External links:

• Credit Reports
  Every time a customer applies for a financial product such as a credit card, the credit company will consult that customer’s credit file. This file records all their financial activity in terms of credit applications and banking activity.
• Credit Cards Designed To Improve Your Credit
  Credit cards have become very popular over the years because of the ease, convenience, and flexibility that they provide, and these days there are many different types of credit card available
• Applying For Credit Cards When You Have Bad Credit
  For those with a poor credit score, getting a credit card is harder. However, there are solutions and we will discuss and offer these in the article.
• Using Your Credit Card To Build Credit History
  Let’s say you want to buy a house, but you need to get a mortgage to help pay for the house. However, you have no credit history to speak of, so how can you apply for the mortgage to get your dream home?

Tags: report, cards, secured, poor, debt, build, rating, credit, Loans, bad

ICICI to expand in UK

Indian bank ICICI is planning to expand its operations in the UK, offering consumers the chance to take out personal loans, current accounts, and insurance services.

The bank is planning to expand its services over the next year. In addition to expanding operations the company has stated that it will also improve on the time it takes to respond to customer queries, which currently takes between 24-48 hours.

ICICI is a subsidiary of the second largest bank in India, and was established in 2003. It has enabled consumers in the UK to enjoy excellent rates on savings accounts, and due to its high rates on savings has gained popularity amongst consumers in the UK. However, one thing that has gone against the bank is that many consumers have never heard of it and therefore have avoided it despite the high rates of interest offered on its HiSave Account.

Until recently the bank had refused to sign up to the Banking Code in the UK, and consumers were concerned about this as well as the bank’s reputation when it came to dealing with customer complaints and queries. One official from ICICI stated that the reason that it had not signed up to the Banking Code previously was because its bank cards were not yet chip and pin compliant.

One official from the bank stated: ‘The major obstacle was that our cards weren’t compliant. Customers can now change their pin numbers as they like and, as our systems have become more automated, we have cut down on the time it takes to open a new account to bring it in line with the industry average.’

Alan Wright
15th November 2007

Tags: credit, bank, account, cards, indian, current, Loans, icici, personal

Data loss puts thousands at risk

Thousands of Standard Life customers could be at risk of identity theft after their personal details were lost.

The details of around fifteen thousand Standard Life customers were being sent on CD from HM Revenue and Customs to the Standard Life headquarters in Edinburgh. This is a routine process carried out by HMRC. However, the courier lost the CD on this occasion, and it never arrived at the company’s headquarters.

Officials from Standard Life and HMRC are now warning customers to be vigilant. The data related to pensions customers, and amongst the information about each consumers was their National Insurance number, their names, their dates of birth, and their pension plan numbers. The CD was sent and lost around a month ago state officials. Reports also claim that a second CD with consumer information has gone missing, but it is not yet known which company this second CD was meant to go to.

The customers at risk have now been sent letters from Standard Life and HMRC. However, this is almost five weeks following the loss of the data, which has resulted in criticism.

One customer expressed her concern over the delay in notifying customers of the breach of security, stating: “This happened at the end of September and it is a month before notification. They are saying that addresses were not on there, but if someone has your surname and date of birth it is not that difficult to track you down.”

An official from Standard Life stated: “We have no evidence that the disc has fallen into third party hands and we have also been closely monitoring all the accounts and have seen no indications of any suspicious activity.”

Mark Wright
8th November 2007

Tags: security, lost, stolen, personal, information, standard, disc, data, life

New account launched by Alliance and Leicester

A new current account has recently been launched by the Alliance and Leicester. The Account, which is known as the Premier 50 account, is aimed at customers aged 50 and over, and offers a wide range of benefits that could suit consumers in this age group.

Older travellers can find it notoriously difficult to get travel insurance, and one of the benefits that this bank account offers is annual worldwide travel insurance that provides cover up to the age of 79.

Other benefits that come with the Premier 50 account include a credit interest rate of 7% AER, a range of medical benefits, and a range of lifestyle and leisure benefits. However, despite all of these benefits it is uncertain how successful the account will be. This is because research shows that consumers aged 50 and over tend to be reluctant to change their current accounts, and survey results show that nearly 50% have never switched banks.

Customers of the Premier 50 account will be able deposit cash and cheques, and make withdrawals at over twelve thousand post office branches throughout the country. A monthly fee of £10 is charges on the account, which covers the cost of all of these benefits. Medical consultations, diagnostic tests, and a 24 hour helpline are included in the benefits that are offered with the Premier 50 account.

Another bank, NatWest, recently launched an age specific account, with its NatWest Adapt account, which is aimed at those aged between eleven and eighteen. Bank officials stated that the account was aimed at helping people in this age group to learn how to manage money responsibly and sensibly.

Tags: accounts, interest, leicester, alliance, bank, personal

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

Consumer confidence in banking falls

According to a recent survey the levels of consumer confidence in banking have fallen recently, and experts state that much of this reduction in confidence has been fuelled by the recent turmoil and chaos faced by Northern Rock.

The survey was carried out by Teamspirit, and showed that levels of confidence in banking and the finance industry as a whole have taken a real knock over recent weeks, affecting many sectors of the finance and banking industry.

Almost 2500 people were polled as part of the survey, and the results showed that only 46% of consumers now had trust in high street banks. A slightly higher number of consumers expressed confidence in building societies, with 48% stating that they trusted building societies. Online banking also took a hit, with just 25% of consumers stating that they trusted inline banking – experts state that this could be partly due to severe problems that Northern Rock customers experienced over the past couple of weeks.

One official that was involved in the survey stated that the whole Northern Rock situation had resulted in a damaging effect in terms of consumer confidence in finance and financial institutions.

She said: “The Northern Rock situation has contributed to the low levels of trust that the British public has in companies that look after their money.”

Another factor that has also affected levels of consumer confidence according to many experts is the turmoil that has hit the financial markets over the past month, which was sparked by the credit crunch in the United States. This has had global repercussions, affecting many areas of the financial sector in the UK as well as in other countries.

Tom Smith
25th October 2007

Tags: society, Banking, finance, accounts, high st, confidence, building

Lloyds reductions in charges may not be all that great

Consumers and campaigners were pleased when Lloyds TSB, one of the UK’s major high street banks, recently announced that it was cutting its charges for unauthorized overdraft use, bounced cheques, and returned direct debits.

However, the victor has quickly turned to concern, with campaigners pointing out that under the new charging structure many bank customers could actually find themselves even worse off than they are now.

Lloyds TSB announced that it would be cutting the charges for bounced cheques from £25 to £20. It also announced changes to charges for unauthorized overdraft use. Previously going over the overdraft limit meant a customer would be charged £30 with a maximum of three charges per month. However, this has now been changed to a monthly fee of £15 and then between £6 and £20 per day for a maximum of ten days.

Officials state that this could mean that someone that exceeds their overdraft limit by £100 could clock up £200 in charges. An official from Which? stated: ‘These charges appear excessive. If you go over by £100 in the course of a month you could end up with total fees of up to £200.’ Other major banks have also made changed to their charges following in the footsteps of Lloyds, but is seems that these charge reductions may not be as beneficial as they initially appear.

The Office of Fair Trading has recently announced that if banks do reduce their charges to the satisfaction of the OFT then the test case scheduled for next year may be cancelled. However, this will only happen if the reductions made by the banks are in the consumers’ best interests.

Tom Smith
20th October 2007

Tags: accounts, charges, personal, profits, lloyds

Parents urged to insure kids’ belongings

Parents in the UK are being urged to insure the belongings of their children, as they head off to school and college armed with everything from their text books and pencils to their mobile phones and games consoles.

Children these days, particularly secondary school and college students, carry a range of valuable items with them, and the cost of replacement if the items get accidentally damaged, or are lost or stolen, can be extortionate.

According to recent research the value of items that the average secondary school student now carried around is about £250. Parents of secondary school and college kids are therefore being advised to make sure that their children’s more expensive belongings, such as hand held consoles and mobile phones, are insured to avoid the financial implications of loss, damage, or theft.

Research shows that around 20% of secondary school students carry a hand held games console, and around three in five have a mobile phone that they carry with them. Additional cover may be needed for items such as ipods, MP2 players, and even musical instruments, which can prove to be very costly to replace if they are accidentally damaged or stolen. Sports equipment also needs to be covered wherever possible, as this can also prove costly to replace. Parents are urged to contact their insurance companies and ask for the items to be covered under personal possessions.

There are a number of insurance companies that can offer this type of cover, and parents are advised to shop around to make sure that they get affordable cover that offers competitive prices without compromising on the level of cover provided.

Tom Smith
17th October 2007

Tags: kids, cover, claim, lost, valuable, personal, Insurance, companies, belongings, school

Who is covered by the Treasury guarantee over Northern Rock savings?

Over the past week Northern Rock has suffered huge problems after it was revealed that the bank had taken a loan from the Bank of England.

Despite assurances from the government and from Northern Rock that the company was still solvent and financially sound savers flocked to the branches of the bank for days, queuing to take out their money, with billions being withdrawn by many of its 1.5 million savers. Share prices also plummeted leaving the future looking very bleak for the bank.

Earlier this week the Treasury decided to step in, and in addition to assuring consumers that it would not have considered lending money to a company that was not financially viable and stable, it also offered guarantees to savers to try and reduce the number of people hastily withdrawing their money from the bank amidst fears that Northern Rock would go bust.

The Treasury has now elaborated on its guarantee to ensure that consumers in the UK are clear with regards to who is covered and who is not. For those covered the government has guaranteed the safety of every penny of their savings. Bank accounts that were open as at midnight on 19th September, and any accounts that were closed and are now re-opened will be guaranteed. However, new accounts opened after this time will not be under the guarantee.

Officials stated: “This guarantee covers future interest payments, movements of funds between existing accounts, and new deposits into existing accounts. Since it would otherwise be unfair to other banks and building societies, the arrangements would not cover any new accounts set up after 19 September.”

Tom Smith
17th October 2007

Tags: personal, bank, northern, cover, treasury, england, savings, guarantee, accounts, rock

Make sure your kids’ belongings are insured

Parents in the UK are being urged to ensure that their children’s belongings are insured after research showed that kids today carry around an array of expensive gadgets and items when going to school or college.

This includes mobile phones, MP3 players, iPods, handheld games consoles, digital cameras, and even expensive jewellery in some cases. Industry experts state that the cost of replacing the items should they be lost, stolen, or damaged could be very high, and therefore parents should make sure that there is adequate insurance in place.

In addition to a range of expensive gadgets and jewellery, many kids also carry costly sports equipment or musical instruments to school or college, and again the cost of replacement in the event of loss, damage, or theft can be very high. Parents are urged to ensure that the insurance cover in place covers all of these items, so that there is no financial loss in the event of a loss, theft, or damage to the items.

According to a recent survey around three in five school and college kids carry a mobile phone, and around one in five carry a handheld games console. As an increasing number of mobile gadgets comes on to the market, kids today are going to school laden with an array of expensive items making them targets for thieves. The average student now carries around £250 worth of items according to reports.

Insurance experts advise parents to contact their insurance companies and ensure that the goods carried around by their children are covered under personal possessions. Parents may want to shop around to compare the cost of this cover, as it can vary from one provider to another. Parents should also make sure that they disclose all expensive items that their child carries to ensure that the cover provided is adequate.

Tom Smith
9th October 2007

Tags: kids, Insurance, home, cover, companies, personal, items, belongings, children

Benefit from low cost home insurance cover from Sainsbury’s

Supermarket giant Sainsbury’s recently announced changes to its credit cards that meant consumers would be able to enjoy longer interest free periods on purchases in addition to a low life of balance transfer interest rate, as well as other benefits.

The supermarket giant has now announced that it has some good news for homeowners that want to enjoy the peace of mind and security of having comprehensive home insurance cover in place without having to pay over the odds on this type of cover.

Sainsbury’s has announced a special deal that will be available for consumers that wish to purchase both buildings and contents insurance cover as a bundle package. These consumers will be able to get twelve months of cover for the cost of just nine months, saving them 25% on the cost of their premiums right away.

Furthermore, consumers that make the purchase online will be able to save a further 10% on the cost of their cover, which means that some consumers could save a whopping 35% on the cost of their cover for a year.

The offer is open to consumers that take out cover before the 27th November, and could attract many customers who are taking out cover for the first time or are due to renew their cover. As a special bonus consumers that take out this cover before 27th November will also enjoy being in with a chance to earn one million Nectar points. The cover includes protection against accidental damage, and customers are able to pay conveniently and easily by direct debit.

Officials from the company state that although insurance premiums on home and contents cover has risen recently, particularly after the flooding problems that hit the country in June, there are still affordable policies and deals available.

Tom Smith
9th October 2007

Tags: flooding, home, contents, supermarket, personal

Supermarkets branch out to car insurance

Over recent years supermarket giants in the UK have branched out enormously and in addition to offering groceries and household goods many have also been offering a wide range of financial products, such as loans, credit cards, insurance products and even banking facilities.

According to a recent report, Tesco has now gone a step further and has launched a price comparison website for those looking for deals on car insurance in the UK.

There are already a rising number of price comparison websites in operation for car insurance, and Tesco will be joining this long line of comparison sites with its news venture Tesco Compare.com, which has been launched in conjunction with the Royal Bank of Scotland. The site will be launched in mid-September, but consumers should be aware that there will be a limited number of insurance companies that are used in the comparison, which totals around twenty in all.

As has been the trend in other sectors, this move by Tesco could result in other supermarket giants also setting up similar sites, which means that the huge number of price comparison sites could balloon even further in the near future. As with other price comparison sites customers will be able to enter their details into the Tesco website in order to search for the best deal on car insurance, but this will be from between the companies listed by Tesco.

Amongst the insurance companies that will be listed are some RBS ones, including Churchill, and consumers are reminded that because of the limited number of insurance companies that will be listed there could be better deals available from other insurance companies that are not listed on the Tesco site. 

Tom Smith
20th September 2007

Tags: car, site, brokers, price, compare, Insurance, finance, personal, comparisons

Consumers still failing to get best rates on their savings

According to a recent study many consumers in the UK are still failing to make the most of their savings by finding an account that pays a competitive interest rate.

The news comes despite the five interest rate rises that have been applied to the base rate by the Bank of England over the past year, taking the base rate from 4.5% to 5.75%. Experts state that consumer apathy is resulting in many savers losing out on significant amounts of interest each year.

Many banks have come under fire over the past year for failing to apply interest rate rises in full, or at all in some cases, to their savings accounts. Even those that do pass the rate rises on have been under fire for taking their time to do this, whilst moving much more quickly when it comes to applying the rate rise to borrowing.

Although many savings accounts have let their interest rates stagnate, and some pay very low rates of interest, there are also some account that have passed on all interest rate rises in full, and are now paying above and beyond the base rate.

Amongst the savings account that are now paying well over 6% in interest to savers are ICICI, Sainsbury’s online savings account, and IceSave. However, despite the availability of higher rate savings account research shows that many consumers are allowing their savings to snooze in low rate account where they are earning very little in interest.

Many consumers don’t bother to research higher interest rate alternatives, and some simply feel that they don’t have the time to switch. However, for many – particularly those with substantial savings – switching to a higher rate account could mean a significant difference in the amount of interest earned.

One industry professional stated: “I guess it’s just clients are looking for reliability and consistency; they don’t always want to be chopping and changing their bank accounts. So I think people are aware of it, it’s just a matter of priority. You don’t want to be changing your bank account every couple of months.”

Tom Smith
28th August 2007

Tags: earn, accounts, rates, cost, higher, accrue, personal, consumers, savings

Have you lost track of your account?

The government and the British Banker’s Association are working together to try and deal with the issue of dormant bank accounts, where banks are unable to trace the owners of account, which have been left dormant for years with no transactions being made on them.

Accounts that have not bee touched for three years or more are generally classed as dormant, and both the government and the BBA have been looking at ways to try and deal with this issue.

The priority is to try and reunite these dormant bank accounts with the account holders, as even though the account is classed as dormant the money in it is still the account holders. Many accounts have just a few pounds in them, and there are also many dating back ten years or more when many people were opening a number of accounts with £100 deposit in order to cash in with a windfall in the event that the building society became a bank or there was some sort of merger.

So far a number of accountholders have been successfully reunited with their lost accounts. One BBA spokesperson stated: ‘Already this year, we’ve processed 6,000 claims. This compares with 7,000 for the whole of last year.’ Those that think that they have a dormant account are being encouraged to contact the British Bankers Association for further information and to make a claim to the account either by phone or via the BBA website, which is www.bba.org.uk

The government is also looking into options for the use of money from accounts that are not claimed by any consumer. A commission was set up 18 months ago to deal with this, and it is likely that monies from unclaimed accounts will be used towards a number of worthy causes.

Tom Smith
27th August 2007

Tags: uk, claim, savings, personal, bank, charges

Many people permanently in the red with overdrafts

A recent report has highlighted that by the 20th of each month many Brits find themselves running out of cash and having to rely on their overdrafts to see them through the rest of the month until payday.

In some cases, once payday comes around, Brits are able to slide back into the black for several weeks. However, there are also many Brits that will go straight back into the red, even after their salary has been paid in, because their accounts are permanently overdrawn.

Around two million consumers in the UK are always in the red, unable to pull themselves out of their overdraft debt and therefore having to rely heavily on their overdraft facility. In the past year, according to research, around ten million people in the UK have used their overdraft on at least one occasion. Rising interest rates and repayments may have contributed to this figure, with more and more people having to dip into their overdrafts in order to stay afloat due to rising repayments.

One industry professional stated: ‘It’s no surprise so many people are permanently in the red – with interest rates having risen five times in the past year consumers are not doubt feeling the squeeze. People often dipping into their overdraft need to watch the Effective Annual Rate as some can be punitive and they may find they are better off spending on a 0% credit card in the future.’

Those aged 55 years and over were found to be the best at staying out of the red, with an impressive 64% in this age group managing to stay in the black. This compared to 40% of 18-24 year olds. In the 45-54 age group 5% were permanently in the red.

Tom Smith
31st July 2007

Tags: red, current, accounts, debt, bank, purchases, card, credit

More UK people using online banking than phone banking

The power and popularity of the Internet has been reflected in the figures of a recent survey that show more people in the UK are now using online banking than telephone banking, despite the many concerns that keep being raised with regards to the security and safety of online banking. Most savvy consumers are now well aware of the various online banking scams in circulation, and are aware of what to look out for and what they should and shouldn’t be doing in order to keep their personal and financial data safe when it comes to online banking.

According to the latest figures around seventeen million adults in the UK now have online bank accounts, and two thirds of these online bank account holders tend to go online at least once each week in order to check financial data or make transactions. There were nearly one and a half million fewer people using telephone banking in 2006 than there were using online banking, and 2006 has been the first year where online banking has proven more popular than telephone banking, reflecting rising consumer confidence in this method of banking.

Data shows that the number of people using telephone banking over recent years has fallen, whereas those using online banking have rocketed, rising from seven and a half million four years ago to nearly seventeen million in 2006.

Sandra Quinn, director of communications at Apacs stated:  “Our research shows that increasingly, if you are under 35, you are more than likely to be turning to the internet rather than the phone to manage your finances.” The research that was conducted also showed that ninety percent of those using online banking also shopped online, again proving the rise in consumer confidence in terms of financial transactions over the Internet.

Tags: consumers, phone, personal, accounts, Banking

Will other banks follow First Direct and charge fees on current accounts?

Following the shock announcement recently made by officials from First Direct Bank, a subsidiary of HSBC, that it intends to start charging customers that do not pay a certain amount into their current accounts each month, many are now wondering whether other banks and building societies will follow suits, bringing to an end the era of free banking for consumers in the UK.

First Direct made the announcement last week, shocking experts and customers by stating that a ten-pound monthly fee would be charged to current accounts that did not have at least fifteen hundred pounds in. It has now been revealed that Nationwide may also be looking into charging bank account holders in the same way at some point in the future, with one executive from Nationwide allegedly stating: “I don’t think we can rule out charging for current accounts totally although we have no immediate plans to introduce such charges at the moment.”

Halifax, on the other hand, have promised that it will not be introducing any such charges on current accounts, and is in fact planning to open three new branches in the UK, as it is thought that many existing First Direct costumers will now be eager to find alternative banking solutions in order to protest against and avoid the new charges being introduced by First Direct.

One official from the Halifax stated: “Halifax is committed to free banking, and we would hope that other banks and building societies share this commitment.” Sadly it looks as though First Direct do not share any such commitment, and the impressive reputation and customer base that this Internet bank has built up over recent years is likely to take a tumble over the forthcoming months, with consumers desperate to get their accounts switched to a non-charging bank or building society.

Tags: uk, first, charge, Banking, direct, personal, cost

The Pros And Cons Of A Business Credit Card

There are hundreds of business credit cards from banks and other business service providers. In fact, there are so many that it can be difficult to choose the right one.  Here’s a guide to what you should look at when choosing a business credit card and what to avoid to make sure your business stays financially healthy.

Business Card Advantages

One of the main advantages of a business credit card is that it can be used to manage cash flow. Business owners and their employees can use business credit cards to pay for goods or services that require immediate payment. At the same time, they can benefit from an interest holiday of up to 56 days before the money is deducted from their business accounts. Deferring payments in this way can be very useful for business owners.

Another key advantage benefits both employers and employees. When employees travel on business they often have to pay for hotels, car hire, flights, meals and business entertaining. In many cases, this comes out of their pocket and they have to wait to be reimbursed. Using a business credit card means that employees can charge these business expenses straight to the business without waiting for reimbursement. This keeps their personal finances healthy.

Saving Accounting Time

For employers, this practice has another advantage. Hours and hours of accounting time (and business money) can be spent on sorting out employees’ expenses. This workload is much reduced with a business credit card. While businesses may choose to have the backup of having employees submit expense reports, the business credit card statement may be enough. Each month, business owners get a statement that itemises all transactions on the business account, regardless of which employee made them. Some business accounts offer advanced reporting features that will help with VAT calculations.

Business Card Disadvantages

Despite these advantages, there are a couple of major disadvantages to business credit cards. For example, if an employee accidentally or deliberately reveals card details, there could be expensive transactions on the account. Even if the employee has committed a fraud, the business may still be liable. Such situations can also take a long time to sort out.

The other potential issue is the same for business credit card holders as it is for personal credit card holders. Money spent on a credit card is actually debt. With preferential interest rates and long interest free periods, business owners will need to make sure that they don’t get into a cycle of debt. This could seriously damage the long term financial health of their business.

Other Business Finance Options

For this reason, it is also worth considering other financing options for the business. A business debit card, for example, keeps tight control of access to the account. In addition, business owners cannot spend more than they have in the account, unless they have agreed an overdraft facility. A business loan is another option worth serious consideration. Whichever option business owners go for, it is essential to manage finances prudently and avoid getting into long term debt.

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