Payday loan repayment delays can lead to hefty charges

According to a recent report there are now many people who take out payday loans in order to bridge the gap between paydays. With the cost of living soaring, petrol prices having rocketed, bills going up, and food costing much more, many people are now struggling to make ends meet financially and their wages are simply not lasting for the whole month, leaving them short of cash part way through the month when the next payday is still a long way off.

As a result of this, more and more people have found themselves in a situation where they have had to borrow money in order to make ends meet and for some this is becoming a regular occurrence. Whilst some people are turning to family members and friends in order to secure this finance to tide them over others are turning to lenders, with many opting for payday loans because they are quick to process, require no credit checks, allow consumers to borrow modest amounts of money for short periods of time, and offer a fixed fee.

However, whilst some people have found these payday loans to be a financial lifeline in a very difficult climate, industry experts are warning that the cost of borrowing can increase even further with these payday loans if they are not repaid on time. The interest rates charges are already extortionate on these loans, although many customers do not realise this because they are borrowing the money for such a short period of time.

One financial industry professional said: “There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. The golden rule is not to borrow money unless it is absolutely necessary.”

Tags: order, customers, tide, result, Payday loan repayment, credit checks, personal finance

Make 2011 the time to get a better credit card deal

Whilst many people in the UK are on poor credit card deals, with high rates of interest and little to nothing in the way of benefits, many fail to take any action such as switching to a more favourable credit card. However, with 2011 almost upon us now could be the time to act, and by doing this cardholders could enjoy far greater benefits or could enjoy paying far less – or even nothing – in interest.

At the start of 2011 new regulations will come in, which will see credit card providers having to make a number of changes to the way in which they operate in order to benefit consumers. This will include a new minimum payment system, which will ensure that cardholders are not left festering in debt indefinitely because of minimum repayments, and more importantly the need for card providers to apply repayments to more expensive debt rather than the cheapest debt, which could save consumers a small fortune in interest.

However, there are fears that these changes, which are due to come in soon, could result in credit card provider trying to bring in sneaky new charges and increase interest rates in order to recoup their losses, and some credit card holders could find themselves paying even more for their borrowing as a result of this.

Rather than just putting up with the way that credit card providers decide to change the account many cardholders could find that they can benefit hugely in terms of their finances by taking the time to find a more competitive deal on their credit card, which will help them to start the New Year in the way that they mean to go on – with streamlined finances and in a better financial position.

Whilst credit cards are not as easy to get as they once were, prior to the onset of the global financial crisis, it is possible to get a good deal on a credit card if you have a decent credit rating. The easiest way to do this is to get online and find a credit card that suits your needs, but which offers far better value for money than your existing card. You can then save money on the amount of interest that you pay, or if you do not tend to spread your repayments you could even opt for a rewards based credit card.

Tags: minimum payment, amount, number, increase, favourable credit card, personal finance, Credit Cards

Lack of mortgages leads to increased demand for rental property in London

The financial crisis is still having severe repercussions when it comes to the mortgage and property markets, and getting a mortgage these days can be very difficult for first time buyers because of the restrictions that are still in place amongst lenders and the high deposit levels that lenders are demanding from would be buyers in order to stand a chance of getting the mortgage loan that they need.

For those that are looking to live in London things are even more difficult, and the high cost of property in the capital coupled with the problems with getting a mortgage and lack of 100 percent mortgages has made it impossible for many people that need to or wish to live in the city to actually buy a place of their own. This has led to an increase in the number of people looking to rent property in London.

The surge in applications for rental properties in London has led to experts advising those looking to rent in London to look sooner rather than later, as the demand for property in the area is set to increase. In fact, it has now got to a point where demand has reached a level that enables some landlords to accept sealed bids from interested parties.

One official said that there was a revival in the city and a large number of students looking for accommodation, all of which had added to the high demand for rental property in the area. Another official said that landlords in London needed to consider not increasing the rent on their properties, as this would encourage existing tenants to stay on and could cut costs.

Tags: personal finance, mortgage, rental properties in london, interested parties, economics, london, Demand (economics)

Loan service launched to help consumers avoid loans sharks

A new loans service has been launched in the UK to help consumers get the finance that they need to manage financially without having to turn to loan sharks, according to recent reports. There have been many concerns expressed about consumers that cannot get traditional credit, as many turn to unscrupulous and unregulated loans sharks out of desperation.

The new loans service in the West Midlands has been launched by the National Housing Federation, and it is hoped that it will help consumers that cannot get traditional finance to avoid going through a loan shark. Consumers will be able to borrow up to £500 as part of the service, and this will be subject to a 45 minute interview to ensure that the borrower will be able to repay the loan.

Repayments on the amount borrowed will be paid weekly, and in addition to being able to get a modest loan consumers will also be able to benefit from debt advice. The scheme is being called My Home Finance, and it will offer a range of services including helping consumers to open bank accounts and offering advice on their debt and financial problems.

One concern that some have about the new service is that the interest charged is higher than the maximum level that credit unions are allowed to charge, which is 26.8 percent APR. The new scheme charges interest of 29.9 percent APR during the pilot, and this will then increase to 49.9 percent APR.

An official from the National Housing Federation said: “By offering fair loans at fair prices, we hope to offer an alternative to both loan sharks, who cynically prey on hard up families, and doorstep lenders, who are all too willing to lend cash to the desperate at hugely inflated rates of interest.”

Tags: Title loan, loan, National Housing Federation, new scheme charges, debt

What to look for with a personal loan

Whilst credit conditions have undoubtedly been strained over the past couple of years many believe that things are now easing up in the financial markets, and whilst lenders have not gone back to the days of easy credit the availability of loans and finance does appear to be easing up to some degree.

With this in mind many people may now start to think about taking out a personal loan for a variety of purchases, and with things easing up in the financial markets the choice of personal loans is greater than before, and there are some pretty good deals available for those that have a decent credit history and score.

There are many lenders that offer personal loans, and which cater for the needs of a wide range of people and needs. It is important for those that are looking for a personal loan to do some research and familiarise themselves with the different loans and deals available so that they can make a more informed choice when it comes to deciding which of these loans to opt for.

It is easiest to use the internet to browse and compare the different personal loans available, as this will allow you to quickly see which loans fit in with your needs and your budget without having to deal with any pushy sales people or feel embarrassed about going through your finances with someone on the phone or in person.

There are a number of key areas that you need to look at when browsing personal loans with a view to taking one of these loans out. The interest rate that you will be charged is a very important consideration, so this is something that you need to compare. However, do bear in mind that if a lender advertises a typical APR this does not mean that you will necessarily get that rate of interest but that most of the lenders customers get that rate.

The repayment periods on personal loans can vary from one provider and loan to another, so this is something else that you need to look at when you are deciding which loan you should go for. If you want to keep your repayments down then you need longer repayments periods, so make sure that you know what’s on offer.

Other things that you need to look at include the overall monthly repayments to ensure that you can afford the repayments, the eligibility requirements, the terms and conditions of the loan, and the borrowing limits, although this will vary based on your financial status.

Tags: personal finance, overall monthly repayments, Unsecured loan, loan, interest

Getting better information on credit in current economic and financial climate

The global financial crisis and recession has had a profound impact on the lives of many people in terms of finances, and one of the areas that has been deeply affected by the economic and financial climate over the past couple of years is the financial sector. Read more

Tags: Credit history, personal finance, Credit score, debt, finance, capital one, credit

Further increase expected with credit card interest rates

Over recent years there has been a lot of controversy with regards to the high rate of interest that is charged on many credit cards, with campaigners, consumers, and various other officials pointing out that the gap between the base interest rate – which is at its lowest level on record at just 0.5 percent – and the average credit card interest rate was getting wider and wider.

Whilst the base rate has been at its all time low for well over a year now credit card interest rates have continued to increase, leaving many credit card customers who are unable to settle their balances in full at the end of each month facing very high levels of interest on their debts. However, despite the controversy it appears that the problem could be set to get worse.

According to reports experts from the credit card industry are predicting that credit card companies are set to increase credit card interest rates even further, and this could further impact on the finances of many people that are already struggling to stay afloat. Experts believe that credit card providers will increase their rates in order to offset the risks that they are having to take.

Recent research showed that over five million consumers in the UK had admitted to using their credit cards on a regular basis to make bill payments and other essential payments, and this means that the higher interest rates could take their toll on many people.

A spokesperson from Moneyfacts.co.uk said: “Providers have been putting rates up and obviously there’s high unemployment and the risk of people defaulting and not repaying their debts is still quite high, so they’re very strict on who they give their cards to. The customers that pay off just the minimum every month are going to be the ones who are hit hardest. They’re going to add, maybe, hundreds of pounds extra on to their debt and take a lot longer to repay [it].”

Tags: risk, Credit card, rate of interest, personal finance, increase, interest, credit card interest rates

Exercise caution when looking for a non-traditional loan

These days many people are looking to get finance or credit of some sort, but because of the difficult financial climate and the increased caution being exercised by lenders many are finding it increasingly difficult to get the finance that they need.

As a result of this there are many borrowers that are turning to less traditional means of getting credit or raising finance, and whilst some of these options can prove useful and helpful for consumers industry officials have warned that caution should always be exercised to ensure that the deals that are available are fair and affordable.

There are a number of options available to those that need to get money but cannot afford to get credit from traditional lenders. However, before jumping in and taking up one of these options it is important for consumers to consider the cons as well as the pros, and to ensure that they are not getting ripped off as a result of the transaction.

One of the options that people might use when they are unable to get traditional finance is a payday loans company, which offer short term loans to tide borrowers over until payday. The APR charged on these loans can be very high. However, most will charge a fixed fee such as £10 per £100 borrowed and if you are only borrowing over a short period this may be an affordable option. Most do not carry out credit checks either, although proof of income must be provided. If you are considering a payday loan make sure that you check a few and compare the fees and charges so that you can get the best deal.

Another option that many people might look at is to get cash for gold, with a plethora of advertisements trying to tempt consumers to send in their gold jewellery in exchange for cash. However, many reports have claimed that the consumer often only gets a fraction of the value of the jewellery when doing this so you need to make sure that this is a viable option for you and don’t let yourself get ripped off over how much you are paid for your jewellery.

Finally, many people that cannot get mainstream finance may be tempted by doorstep lenders, and more worryingly loan sharks. You should bear in mind that with doorstep lenders you may be charged an extortionate rate of interest, which could be financially crippling. When it comes to loan sharks you should always avoid them and look at alternatives, as these are unregulated and often unscrupulous lenders, and you could end up in very hot water by borrowing through them.

Tags: Payday loan, finance, rate, traditional finance, personal finance

Getting a good deal on a personal loan

Over the past couple of years the availability of personal loans has become somewhat restricted, and the global financial crisis and recession have made it difficult for many people to get a good deal on personal finance. However, the market is now starting to ease, and this means that whilst personal loans are by no means being dished out like smarties, as they were in the days before the credit crisis, it is a little easier to come by a good deal on a personal loan than it may have been a year or so ago.

These days people use personal loans for all sorts of purposes, and if you get the right loan this can be a great way to fund a range of things that you may want. Whilst the use of personal loans for debt consolidation has fallen over recent years many people use these loans for things such as improving their homes, buying a new vehicle, paying for a wedding, or even funding a dream holiday.

Your ability to get a low cost personal loan will depend on a number of factors, including your credit history and rating. Those with good or excellent credit should be able to find a low rate personal loan without any problem, whilst those with a tarnished credit history may find it difficult to get a personal loan or may have to pay a higher rate of interest because of the increased risk they pose to the lender.

In order to get the best deal on a personal loan you need to make sure that you compare the deals on offer, as this will boost your chances of finding a loan that comes with affordable repayments. You can compare loans quickly and easily online, and using a comparison site could help to save you time as you can check out a range of personal loans and providers at a glance.

When you are comparing personal loans there are a number of things that you need to look at to check the suitability of the loans. You should check out the interest rate on the loans, as this will determine how much you repay on the loan. Also, compare the repayment periods available, as this will give you an idea of how much you need to repay each month. Always ready the terms and conditions of the loans to check on any penalties or extra charges.

Tags: Unsecured loan, loan, personal finance, credit, finance

Are we home and dry when it comes to repossessions?

The UK, like many other countries, has been through a tough time over the past couple of years in terms of finances, and one of the side effects of the financial crisis has been the soaring level of repossessions that have taken place. Read more

Tags: repossession, personal finance, homeowners, mortgage, Financial Services Authority, financial crisis

Banks make the switch from Maestro

It has been reported that a number of UK banking giants are working towards replacing their Maestro payment cards to alternative such as Mastercard and Visa payment cards. Read more

Tags: Credit Cards, personal finance, MasterCard, switch, Visa, Debit cards, Maestro

Cash back cards set to become scarce

Over the years many consumers in the UK have taken advantage of cash back credit cards, and these are a type of reward credit card that enable consumers to earn a set level of cash back on every pound that they spend on the card on purchases. Read more

Tags: reward schemes, personal finance, figures 25 percent, Credit Cards, credit card provider, rewards credit cards, pound, United Kingdom

Supermarkets offering better deals on credit cards than banks

A recent report has claimed that on average supermarkets tend to offer better deals on credit cards these days than banks, which means that consumers can often get a great deal on a credit card simply by heading to their local supermarket rather than trawling through the websites of the various High Street banks. Read more

Tags: report, personal finance, local supermarket, Credit card, lending criteria

Credit card industry speaks out against government proposals

The credit card industry in the UK has spoken out against one of the measures that has been proposed by the government to try and curb some of the practices used by credit card companies. One of the measures that the government has proposed in order to reduce problems relates to the credit limits that credit card providers offer, and the aim of the government was to try and get credit card companies to reduce these limits. Read more

Tags: personal finance, interest rates, Credit history, UK Cards Association, Stoozing, Credit card

Recreated paperwork could cause problems for borrowers

According to a recent report many lenders tend to misplace or lose loan and credit agreements, and in some cases this paperwork is even disposed of, which means that if and when the banks need to refer to the agreement for any reason they are having to recreate the agreement. Whilst this is not frowned upon there is one problem that has been highlighted, and this is the fact that the recreated document often has discrepancies that leave the consumer even worse off. Read more

Tags: debt, High Court, consumer credit lawyer, personal finance, Mortgage loan

Shoppers need to look around for best credit card deals

Consumers in the UK are being advised by industry experts to make sure that they shop around for the best credit card deals, as many credit card providers are now offering a range of perks and benefits that could see consumers getting far better value for money on their spending. Read more

Tags: personal finance, Christmas period, Credit Cards, credit card deals, credit card offers, vouchers, industry experts, business

Property classed as pension for millions

According to the results of recent research there are millions of homeowners in Britain who are relying on their properties to provide them with income with which to retire. Read more

Tags: property prices, personal finance, expert, housing marketus, Business and Economy, pensions, adults, sufficient funds

Worries about finances affecting borrowing levels

It has recently been reported that the level of borrowing amongst consumers in the UK has been negatively affected as a result of so many consumers being worried about their financial situations. Read more

Tags: External Commercial Borrowing, financial crisis, finance, personal finances, Cognition, personal finance

One year high for fixed rate mortgage lending

According to recently released figures fixed rate mortgage lending levels have recently hit their highest level in the space of around one year, as first time buyers and existing homeowners that are ready to refinance try and secure low rates clamour to take advantage of the all time low base rate, which still stands at 0.5 percent, which is the lowest level in the three hundred and fifteen year history of the Bank of England. Read more

Tags: personal finance, council of mortgage lendres, higher deposit levels, fixed rate mortgages, mortgage, lending, first time buyers, Mortgages

Economic recovery depends partly on continued lending

The deputy governor of the Bank of England, Paul Tucker, has recently spoken out about the future of the UK’s economy, and has stated that in his opinion the future of the economy partly depends on continued credit being extended by lenders. Read more

Tags: credit, economic recovery, course, lenders, Loans, News, availability, personal finance

No need to take complaints to FOS through claims handling firms

Officials from the Financial Ombudsman Service have recently reiterated that there is no need for consumers to enlist the help of claims handling firms in order to take a complaint to the FOS. Read more

Tags: personal finance, finance claims, Citizen's Advice Bureau, Ministry of Justice, Financial Ombudsman Service

More Help Needed for Elderly UK Residents

Rising fuel prices is causing financial difficulty for many of the elderly residents of the UK. According to Age Concern and Help the Aged, it is time for the government to sit up and take notice of the problems that this sector of the population is encountering in trying to cope with the current recession. Read more

Tags: pensioners, retirement, type of food, personal finance, old age, Financial services

Understanding Your Credit Rating

A lender is not under any obligation to approve credit for you or to give you a loan. When you apply for credit, lenders look at many different factors in order to determine if you are a good risk to repay. It is important to have an income and you will have to supply proof of being employed. In addition to assessing your income and your existing payments, lenders also look at your credit rating. This alone is weighted heavily in the approval or denial of credit. Read more

Tags: personal finance, experian, identity theft, credit application, religious affiliation, equifax, period of time, credit reports

Home loans are not going to become more readily available yet

Industry experts have recently confirmed what most people have already worked out for themselves – that the availability of home loans in the UK is not likely to increase anytime soon. Read more

Tags: official, mortgage deals, council of mortgage lenders, mortgage, availability, market, Mortgages, personal finance

Repossession schemes will only help small numbers

In a recent report it has been claimed that initiatives launched to try and minimise on repossessions will only help a small number of people. Read more

Tags: government, homeowners, personal finance, job, Impact

Summer tennis may see ‘more home insurance claims’

Home insurance claims involving broken windows may increase in the run-up to the Wimbledon tennis championships, it is claimed.

The number of claims made in June last year for broken windows and other glass breakages was almost a fifth higher than the number of claims made in January of the same year, according to the Halifax.

People in Birmingham and Solihull made more home insurance claims in 2007 than anyone else for incidents involving broken glass, the data suggests.

Head of underwriting for Halifax Home Insurance David Rochester said that there is often an increase in these types of claims during the summer months.

He commented: “We’d advise any budding Murrays and Sharapovas to take care when playing ball sports close to home, and check they are insured for accidental damage should a mishap occur.”

Separate research revealed last week by Tesco personal finance suggests that messing around or horseplay results in damage worth £325 million to British homes each year.

Tags: tennis, summer, care, wimbledon, underwriting, personal finance

Fixed-rates “still” popular

New research has revealed that fixed-rate mortgages continue to be popular among homebuyers even though they have become more expensive in recent months. Read more

Tags: Stephen Smith, future, Homebuyers, fixed rate mortgages, series, Fixed-rates

Brits admit saving less for retirement

As the prices of food and fuel continue to increase, Britons admit they are saving less for their retirement, a new report reveals.

Research published by financial services firm Edward Jones has shown that many people are cutting down on such savings in order to meet their everyday living costs.

Andrew James, retirement planning manager at the firm, said the findings are a “big concern”.

People who fail to save sufficiently for their old age are likely to face issues in the future, he continued.

Mr James also expressed worry that 23 per cent of those questioned admitted failing to save any money towards their pensions.

“It is imperative the government and all those involved in the pensions industry do all they can to keep driving the message home that people must continue to make provisions for their retirement,” he urged.

Earlier this month, financial services firm Life Trust warned that because people are living longer than ever, many could be forced to re-think their financial strategies for retirement.

Tags: personal finance, provisions, big concern".People, report, life trust, Pension, findings, concern

We won’t have cheap credit for ‘a number of years to come’

According to a financial analyst, Brits will not be seeing the days of cheap credit “for a number of years to come”.

Darren Cook, a spokesperson for Moneyfacts.co.uk, said that some experts have predicted the Bank of England base rate will increase another three times before the end of the year.

“These uncertainties, paired with the house price adjustments and many households finding themselves in negative equity, [means] lenders are prudently hedging themselves on pricing due to fears of a massive increase in the probability of default,” Mr Cook commented.

In related news, Experian recently advised consumers looking to secure a loan to check their credit report first.

By doing so, consumer education manager at the organisation James Jones said that consumers give themselves a better chance of their loan application being accepted as they can make sure that the information on their report is correct before it is checked by a lender.

Tags: personal finance, bank of england, Brits, England base rate, Darren Cook, loan, James Jones

Can you benefit from being a credit card rate tart?

There are so many different types of credit cards in circulation in the UK these days it can be difficult to determine which one might best suit your needs and circumstances. However, for some people getting value for money on credit cards means chopping and changing cards regularly to make sure that they are always getting the best rates, deals, and rewards. As a rate tart you can not only enjoy the convenience, flexibility, and benefits of credit card use, but you can even make money and rewards from spending on your credit card. Read more

Tags: personal finance, business, Credit card, rate, rate tarts

Avoid being the victim of credit card fraud

When it comes to credit cards consumers can look forward to a wide range of benefits, ranging from interest free credit and total convenience to flexible repayments and even a choice of rewards with some cards. However, there are also pitfalls to watch out for with credit cards, and one major concern for many people is the risk of credit card fraud. Although security relating to credit card use has become more sophisticated over recent years, the various credit card scams in operation in the UK have also become increasingly advanced, and as a result many people find themselves the victims of credit card fraud. Read more

Tags: credit card statements, email link, credit card fraud, personal finance, financial losses, signature strip, free credit, end

How you can benefit from a notice savings account

There are many different types of savings accounts available these days through the UK’s banks, with something to suit most needs and circumstances, and enabling consumers to save towards a special purchase, for the future, or simply towards a rainy day. One type of account that can prove invaluable is the notice account, which offers consumers a great way to save and helps them to resist the temptation to make impulse withdrawals. Read more

Tags: rainy day, rate of interest, period, different notice accounts, personal finance, rate, savings accounts, Money market deposit account

Don’t rely on credit for household bills, says expert

People should refrain from using credit, loans and overdrafts to pay their household bills, the money education charity Credit Action has said.

Although people have been increasingly using these facilities in the past year, the organisation says that it is not a long-term solution.

Capital Economics recently reported that the share of household income spent on food, bills and other unavoidable costs has risen to 31 per cent from 25 per cent over the past six years.

“It could well be that people who need to find that little bit of extra money to get them to the end of the month or pay the gas bill may revert to credit to do that,” commented Chris Tapp, director of Credit Action.

However, he said that people should be careful of becoming overly reliant on credit since resorting to these measures for long time periods could result them having in serious financial difficulties.

Tags: year, time periods, personal finance, tapp, little bit, education charity, expert, household income

Brits prefer cards to cash

vNearly a third of British consumers use their credit cards for everyday spending, according to new research.

Findings from Fool.co.uk showed that debit cards account for over a third (37 per cent) of spending while cash accounts for over a quarter (29 per cent).

David Kuo, head of personal finance with Fool.co.uk, said that using plastic is useful but relying on money that cannot be seen is indicative of the recent reliance on credit that is apparent in our culture.

“It is more important than ever to build a decent savings pot because one day when you need to pull a rabbit out of the hat, you could find that all you have is a dead duck in your pocket,” he said.

Further results of the study showed that fewer people carry cash, with nearly half of us withdrawing money once a week or less.

Meanwhile, last week, Chris Tapp from Credit Action said that anyone looking for a new credit card should shop around to make sure that they get the best possible deal they can.

Tags: Electronic commerce, duck, debit, personal finance, business

Women urged to think of pensions early

Women need to pay particular attention to their financial futures, because pension arrangements often work to their disadvantage.

With longer life expectancy and a greater likelihood of taking extended breaks from working during their lives, women need to think about pension saving even earlier than men, NFU Mutual has warned.

The insurer cites data from the Official for National Statistics, showing that in 2002, the average value of pension funds of men aged 50 to 54 was £116,000, compared to just £60,000 for women of the same age.

“Really the solution is simple: women should take full advantage of the tax relief on offer to build up a decent pension to provide through what will hopefully be a long retirement,” urged pensions specialist Shelagh Hamer.

“Don’t put off pension planning. By starting to fund a pension early, you have a much better chance of building up a sizeable fund for your retirement. Also, regularly review your arrangements to make sure they are in tune with any changes in your career and lifestyle.”

Tags: GBP, official, National Insurance, Don, life, personal finance, longer life expectancy, greater likelihood

Financial education in schools needs to be practical, say experts

A “purely theoretical financial education” in schools is not enough to assist students as they need practical experience of making decisions about their money, one financial expert has claimed.

Educational charity pfeg said that students at university need to be trained in balancing a budget in class so they can work out how to balance their finances.

Alastair Mathews, director of policy for pfeg, said: “Some students have already learned something about personal finance in their business and economics work – and yet they still don’t have a clue how to manage their credit card.”

The firm added that a theoretical financial education on its own “is not a lot of help” but any subject in the curriculum could be adapted and used to teach children how to use their money.

In the Future Leaders Survey 07-08, conducted by environmental charity Forum for the Future, universities association Ucas and insurers Friends Provident, 81 per cent of respondents (taken this year’s prospective university students) claimed to be ‘very’ or ‘quite’ good an managing money.

Tags: personal finance, something, credit, prospective university students, balancing, Provident, Alastair Mathews, Knowledge

Under 35s facing credit card and loan debt

A new study has found that people under the age of 35 in Yorkshire are having to spend £160 a month servicing their debts.

Skipton Building Society reports that after paying rent and mortgage costs, the single largest outgoing for people within this group is paying off credit card bills and loan repayments.

The firm’s research also revealed that 73 per cent of people under the age of 35 in Yorkshire have some form of debt, with the average person owing £8,477.

However, a further 11 per cent were found to owe more than £20,000.

Jennifer Holloway, head of media relations at Skipton, said that it is “definitely time for a wake up call” for many people, given that they may have to work longer and earn more to be able to retire comfortably.

“And even though it may seem daunting, it could be easy for those in the red to join those in the black,” she commented.

In related news, Abbey recently reported that millions of people were looking to take advantage of balance transfer deals and switch money owed on one credit card to another during the first three months of 2008.

Tags: finance, personal finance, 35s facing credit, credit card bills, North Yorkshire, loan, abbey, month

Paying off last year’s debts contributing to budget strain

Paying off last year’s debts and current levels of inflation are both using up consumers monthly budgets, one debt expert has claimed.

Debt Action said as inflation has kicked in, people have found that more of their take-home salary is taken up with paying back pre-Christmas loans as well day-to-day expenses.

Chris Tapp, director of Credit Action, said that increasing numbers of consumers have been forced to use their credit cards to fund their everyday lifestyle.

“This is a very worrying scenario to find yourself in and at that point – when you start using your credit card as a necessity, or you’re unable to pay it off month by month – you should go and get help,” he stated.

Credit Action also warned that in the long-term, consumers cannot use a credit card to pay off a mortgage and this is a “worrying indicator” for a spenders’ financial future.

According to figures from Debt Help UK, up to 74 million credit cards have been issued in Britain and by 2009, credit card possessions are estimated to rise to 99.2million cards.

Tags: Chris Tapp, inflation, card, consumers monthly budgets, Stoozing

Number of credit cards offering capped transfers falling

The number of credit cards with capped balance transfer fees is falling, according to financial experts.

MoneyExpert.com said that 12 months ago consumers could choose from 18 different credit cards with capped balance transfer fees, compared with the seven which are now available through five different providers.

Sean Gardner, chief executive of MoneyExpert.com, said: “Credit card switching is big business. Someone switches a credit card every two seconds and there are very few cards out there that still do not charge a fee for the privilege.”

He warned that those consumers looking to move their credit card provider could be “in for a shock” if they do not choose a card with a capped balance transfer fee.

According to MoneyExpert.com, the average balance transfer fee is 2.8 per cent of the amount transferred, meaning the typical cost of a balance transfer is some £74.65.

Customers with higher balances could incur much larger fees – a £5,000 balance transfer could cost as much as £150 with a three per cent fee.

Meanwhile, recent figures from MoneyExpert.com revealed that up to 5.9 customers switched credit card providers in the past six months.

Tags: consumers, provider, balance transfer, personal finance, cent, shock, finance, offering

Bridging finance has an ‘important role’ when credit is hard to get

Bridging loans can play an “important role” during tough financial times, one financial expert has claimed.

Business Moneyfacts said that bridging finance is “ideal” for any situation where funds are required quickly and for short periods.

Bridging loans can benefit property professionals looking to acquire property quickly at a time when the number of repossessions is increasing due to the amount of properties going to auction, claims the firm.

Lee Tillcock, editor of Business Moneyfacts said: “Investors buying at auction have often used bridging because they are required to complete within a few weeks of a successful bid when conventional mortgages are sometimes unworkable.”

He added that in a financial environment where credit is difficult to secure, the bridging option can provide a short term solution while that “ever-more-elusive long-term mortgage” is finalised.

Meanwhile, figures recently released by the Council of Mortgage Lenders show that in 27,100 homes were repossessed last year.

This is the highest figure since 1999 and a 21 per cent increase on the number in 2006.

Tags: Bridge loan, personal finance, figure, finance, cent

Parents can help children buy property

First-time buyers can receive financial help from their parents when paying for a property without any inheritance tax implications, one mortgage expert claimed.

Bestinvest said that if a child’s funding for purchasing a house is assisted by their parents, then they are “party” to the mortgage.

Because of this, parents would rather give them some money and ensure the mortgage is in the child’s name, stated the firm.

Peter O’Donovan, mortgage manager for Bestinvest, said there would be no inheritance tax implications if a property is in a child’s name.

“Even when the parent uses their income to assist [with mortgage payments], the mortgage might be in three names but the property will just be in the child’s name,” he added.

Research released by Abbey earlier this month found that first born children are more likely to receive financial help for a home purchase than their siblings.

Up to 17 per cent of first-borns are given money towards their first home compared with 12 per cent of second-born children.

Tags: income, personal finance, mortgage expert, month, mortgage

New programme in personal finance to be launched

The Association of Investment Companies (AIC), Finance and Leasing association (FLA) and APACS, the UK payments Association have all offered their backing to a new educational programme designed to help consumers make informed financial decisions.

A new ‘ Programme in Personal Financial Planning (PPFP) is to be launched by the ifs School of Finance to ensure that future generations understand how best to use their money, as well as adults lacking those skills too.

Daniel Godfrey, director general with the AIC, said: “The AIC has always argued that financial education should be moved up the political agenda.

“Whilst real and significant progress has been made in the classroom, it is encouraging to see this extended to adult education initiatives.”

The programme arrives as recent research from AIC showed that an estimated 90 per cent of parents did not have any financial education while they were at school.

According to the figures, 65 per cent of those want to receive personal finance training as an adult.

Tags: political agenda, finance, Personal Financial Planning, AIC, Institute of Bankers, agenda, School of Finance, personal finance

Over 9m Brits have no pension provision

Over 9 million Brits have no pension provision yet expect to retire when they reach the age of 62 according to new findings.

Research from Baring Asset Management found that of those adults yet to retire, 24 per cent have no pension provision at all.

The target age of retirement for those between 18 and 34 is 61, in spite of government recommendations stating that it is set to rise to 68 by 2044.

Rob Lay, Barings’ head of European sales, said; “People have to start taking a more proactive approach to planning for their retirement.

“These figures reveal a worrying trend of UK adults assuming that they will be in a position to retire without having made the necessary arrangements for funding that retirement,” he added.

The research also showed that 21 per cent of people expect to be able to retire before 50 with a defined contribution scheme, and 17 per cent expect to be able to retire on a defined benefit.

According to figures from the Government Actuary’s Department, life expectancy for men and women is set to rise to 86 years and 89 years respectively by 2050.

Tags: position, Financial services, contribution, government, personal finance, Department, Pension, funding

Consumers “don’t take the time to read the small print”

When buying into financial products, such as critical illness cover and private medical insurance, “people tend to look at the top line and not the small print”, says financial experts.

Financial advisory firm Ashley Law said that those consumers who purchase products which are cheaper may find they have lesser benefits.

Jock Cassidy, director of Ashley Law, said: “If people don’t take the time to read the small print, and I doubt very much if they do because it’s not exactly the most interesting read, then they’ll go for the cheapest option.”

He added that when a person changes a provider of a financial product “it’s a guess on my part is that it’s [the decision] purely cost-driven”.

Meanwhile, David Elms, chief executive of Unbiased.co.uk, commented has said that record levels of business are being driven to independent financial advice through the company’s ‘Find an IFA’ service

As a result IFAs are converting the leads at a greater rate than before.

Tags: result, time, firm, business, financial advice, line, David Elms, personal finance

Nearly all Brits need a financial workout

Almost all of Britons would benefit from a financial workout, according to the results of a latest survey.

The findings from Abbey show that only one in every 100 Brits manages the various aspects of their personal finance well.

With a higher score indicating the greater the room for improvement in their personal financial management, the average score for the UK population was 43.

Steve Shore, Abbey director of banking, said: “Less than a third of people score less than 30 which suggests that the majority of the population could do with a financial workout.”

Women scored 46 compared with 41 for men and Wales and the South West were the most financially fit.

The research looked at the financial behaviour of British consumers and gave them a score according to the products they held, the competitiveness of these products and how often they shopped around for better deals.

Meanwhile, recent research from Abbey has revealed that the odd jobs economy for children is worth an estimated £696 million.

Tags: personal finance, improvement, british consumers, Wales, director, uk population, steve shore

Church to offer financial advice

The Church of England (CoE) has announced it is to launch a ‘Matter of Life and Debt’ campaign in the face of spiraling levels of personal debt in the UK.

With the UK owing a total of £1,400 billion in loans, credit cards, and overdrafts, advice is to come from both the pulpit and community groups.

The campaign incorporates a ten point checklist, to be viewed as a set of warning signs that show consumers maybe spending more than they could afford.

John Preston of the CoE, said: “If a household can say ‘yes’ to any of the statements on the checklist, it may be on the verge of encountering serious debt issues.”

He added that if a household can say ‘yes’ to three or more of the warning signs, “it would be well advised to talk to a debt counseling service.”

Research from Grant Thornton has predicted that 120,000 consumers are expected to be declared insolvent during the course of 2008.

Tags: matter, debt issues."He, Warning sign, debt counseling service."Research, personal finance, life and debt, Loans, debt issues

Lending to get tighter in the New Year

The effects of the credit crunch will see lenders “tightening up” and looking at minor misdemeanours which may well have been ignored in the past, claim financial experts.

Equifax has said there could be an increase in the number of loan applications in the New Year, as lenders look more carefully at a person’s payment history.

Neil Munroe, external affairs director for Equifax, said: “Any negativity that might not have been a problem in the past might rise in prominence.”

He also warned consumers that an increase in the number of applications within a short space of time can look suspect.

Repeated searches on a consumer’s history have the potential to affect a person’s credit rating.

The latest figures from Credit Action show that total consumer credit lending to individuals in October 2007 was £222 billion. This has increased 5.8 per cent in the last 12 month.

Total lending in October 2007 grew by £8.8 billion.

Tags: Credit Action, finance, equifax, personal finance, time, claim financial experts, economics

Borrowing to continue despite credit crunch

Consumers will continue to keep borrow, despite the credit crunch and its potentially ill effects, claims a financial expert.

Colin Jackson, director of Baronworth Investment Services, has said borrowers “get into a spiral” which could result in debt being built up.

Many people are now using credit cards to pay off their mortgages which is “the most awful situation to be in”, according to Mr Jackson.

He added: “If you’re using your credit card because you haven’t got enough money at the end of the month to pay anyway then you’ll run up bill on your credit card and where do you go next? Another credit card.”

Mr Jackson also said that consumers are finding it “very tough” to put money aside due to rising costs of day-to-day living.

The latest debt statistics from Credit Action shows that total consumer credit lending to individuals in October 2007 was £222 billion.

This figure has increased by 5.8 per cent in the last 12 months.

Tags: awful situation, Credit history, Credit Action, personal finance, 12 months, crunch, bill, end

Christmas get savers back “into the habit”

The availability of Christmas saving schemes has been welcomed as a way of getting people back “into the habit” of saving by a consumer charity.

The Consumer Credit Counselling Service (CCCS) said access to easy credit has made people’s habit of saving redundant.

It welcomed consumers using saving schemes during the festive period as a way of getting people back into the practice of saving money.

James Ketchell, spokesperson for CCCS, said actually putting money away was what was important rather than how consumers do it.

“The important thing is for people to save. It doesn’t matter what way they choose to do that, everybody is different,” he added.

Christmas saving funds can help consumers avoid financial card debts in the New Year. Spreading the cost of Christmas across 12 months can be especially useful for those on a low income the CCCS declared.

Meanwhile the Post Office recently announced the launch of its Christmas saving scheme. This will begin in the New Year in time for the festive period in 2008.

Tags: James Ketchell, financial card debts, Counselling, christmas, Consumer Credit Counselling Service, practice, service, personal finance

Barclays offer reduced personal loan rates

Barclays bank has announced it will cut its personal loan rates when many lenders are having trouble maintaining current rates, according to Gary Druggan, managing director at Barclays Personal Loans.

Cutting rates on its entire book, the lending giant steps up competition in a move that takes advantage of its “strong balance sheet”.

The bank reports that Barclayloan Plus loan rates are going down by 0.6 per cent to 6.8 per cent APR typical.

Mr Duggan said: “At Barclays we are able to take advantage of a very strong balance sheet and finance loans from our very strong deposit taking business, enabling us to cut rates for this campaign.”

Personal loan rates have been just one of many things to be affected by recent credit crunch.

With many lenders forced to push rates up by as much as four per cent, borrowers would have trouble finding a rate below 6.9 per cent.

Mr Druggan added that anyone finding better loan rates than offered with Barclays will be refunded the difference and will also receive a bonus of one pound every month.

Tags: apr, offer, borrowers, move, difference, pound, personal finance, crunch

More financial education needed says CCCS

Britons need to be better educated on their financial management, an expert has warned.

According to Consumer Credit Counselling Service (CCCS) spokesperson James Ketchell, many people lack sufficient knowledge when it comes to using credit and assessing whether they can afford it.

Commenting that there needs to be more financial education among young people, he highlighted the difference between managing credit in comparison to a student loan, which provides cheap credit and is automatically deducted out of a borrower’s wage packet.

Mr Ketchell said that it is currently very easy for people in employment to be offered to take on more credit, adding: ” As prices have gone up and wages have stagnated and mortgages have gone up, people have to use a bit more common sense in their financial dealings.”

His warnings come after Credit Action recently stated its assertion that young people in Britain, amidst rising figures of debt saddled by today’s graduates, have been “educated into debt but not about debt”.

Tags: difference, action, personal finance, wages, Knowledge, borrower's wage packet

Rush on remortgages amidst fear of rate rises

July of this year saw over a billion pounds worth of mortgages being taken out each day with many homeowners deciding to remortgage amidst fears that that interest rates would continue to rise following five interest rate hikes in the space of a year.

The highest in over six years the base rate currently stands at 5.75%, following five rate hikes of 0.25% each since August of last year. Many homeowners have had to cope with rising repayments as their mortgage repayments have soared along with interest rates.

According to figures from the Council of Mortgage Lenders nearly £35 billion was borrowed in the month of July on mortgages, which reflects a 13% rise on the amount that was borrowed in July of last year. According to the CML this increased figures result from the surge of homeowners that have decided to remortgage in order to try and get a better deal on their mortgage in the light of the series of interest rate rises that have taken place – and the threat of further interest rate rises that may yet take place.

A spokesman from the British Bankers Association stated: ‘Longer-term trends in mortgage lending are little changed but July’s strong rise was surprising, given the expected cumulative impact of higher interest rates. The resilience shows the popularity of home ownership and also reflects more remortgaging activity.’

An official from the Building Societies Association stated: ‘As mortgage payments increase, household finances are likely to be squeezed further. Even if interest rates are near their peak, potential borrowers need to think about all their outgoings to make sure they do not overstretch themselves financially.’

Tom Smith
26th September 2007

Tags: british, personal finance, year, remortgages, August, Longer-term trends, increase, surge

For Career Development Loans, past credit score is key

Good or bad credit in the past provides a “good indication” of future credit prospects, according to the Co-operative Bank.

In an interview about Career Development Loans – a bank loan designed to help pay for vocational learning – spokesperson Andy Hammerton said that if an applicant for the loan had “a very, very poor credit history” then the bank “wouldn’t accept them just because it’s a career development loan, they still have to be credit scored. We have to be a responsible lender.”

Mr Hammerton also said that just because an applicant was taking a course – which might be said to make higher future earnings more likely – does not mean that they will not be a credit risk.

“Just because they’re taking a course doesn’t necessarily mean they’re going to be a sound credit risk in the future. They need to have a reasonable credit record.”

Career Development Loans, which offer anything from £300 to £8,000 to fund learning for up to two years, are currently offered by Barclays, the Co-operative Bank and the Royal Bank of Scotland.

Tags: bad credit, personal finance, Career Development Loans, credit, hammerton, earnings, Royal Bank of Scotland, credit risk."Just

Pay as you go credit card

A prepay credit card is being trialled in Liverpool as the UK tries to tackle the problem of personal debt.

The Bread card, which is provided by Maestro, allows holders to put money onto it in much the same way that you top up a mobile phone.

Purchases can be made on the card, while money can also be withdrawn from ATMs. The key difference, however, is that you cannot get into debt or incur charges because the card will only let you spend what you have topped up.

The card is designed to help those who cannot get a bank account because they have previously handled their finances badly, are foreign nationals or are UK nationals travelling abroad.

“This card will give people the chance to rebuild their credit rating, which is great for those who get into a bit of a mess during their teens and early 20s,” said a spokesman for Bread.

“With such a big focus on Liverpool as the capital of culture, Bread thought the card would be perfect to launch in a city which seems to be growing more rapidly than any other in the UK.”

The scheme is set to begin in March or April and will run for around six months.

Tags: key difference, credit rating, six months, foreign nationals, personal finance, bank, Payment systems, spokesman

Fixed-rate mortgage fees rising

Mortgage lenders are raising their application fees for fixed-rate mortgages, as the products become more and more popular.

With interest rates currently standing at 5.25 per cent and fears among many that future rises are imminent, first-time buyers are fearful of taking out variable rate mortgages.

However, as lenders have recognised the growing trend, they have begun increasing application fees, according to MoneyExpert.com.

The average application fee has risen by 18.5 per cent since last August, with products that have a fee of at least £750 also becoming much more common.

“Homeowners are desperate to fix their mortgage rates to avoid incurring further costs caused by rising interest rates,” said Sean Gardner from the website.

“It’s the sensible option, as further rises aren’t out of the question.”

People considering taking out a mortgage, particularly first-time buyers, may find that a fixed-rate is the best option for them.

However, it is recommended that you shop around to find the best mortgage to suit your circumstances and ensure that you can realistically afford to pay the application fee.

Tags: trend, homeowners, fee, first time buyer, application fee, Business Finance, personal finance, option