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Fri 30th Mar, 2007
Posted in Bankruptcy, Borrowing, Consumer Credit, Consumer debt, Debt management, Financial news, Homeowner Loans, Homeowners, Inflation, Personal debt, Property, Secured loans, Spending, UK Finance, interest rates, mortgages at 12:53 pm by Steve Smith
The tax burden on families is running at a record high, fuel costs are out of control, and interest rates are costing the average UK consumer one month’s pay every year.
The government claims the inflation rate is 4.6 per cent, but realistically, the interest rate is closer to 11 per cent.
Charities warned consumers that more interest rate rises, to counter inflation, will push many indebted households into insolvency. Households which only a year ago safely took out homeowner loans for improvements are now finding themselves pushed to meet repayments.
A spokesman for Citizens Advice said the charity is managing a huge increase in the number of cases it handles.
“It only takes a small increase in costs like mortgages and council tax to tip many more people over the edge into debt,” a spokesman said. “Any increase in mortgage interest rates could spell disaster for people whose finances are on the edge.”
Paul Dales, the UK economist at Capital Economics, said: “February’s inflation figures were particularly bad news for some middle class families. “Indeed, they may have seen their annual inflation rate jump sharply from 6.9 per cent in January to 7.6 per cent, driven by the upward impact on mortgage interest payments from January’s interest rate hike.
“With another interest rate rise lurking on the horizon, the inflation rate faced by some middle class families could yet rise further.” The Chancellor’s preferred measure of inflation, the Consumer Price Index, also rose from 2.7 per cent to 2.8 per cent.
Middle class families are losing hope. They are facing more and more obstacles that were not faced in previous generations – like financing children’s education and keeping their parents from going insolvent.
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Posted in Borrowing, Consumer Credit, Consumer debt, Credit Card, Debt management, Financial products, Personal debt, Spending, UK Finance, Unsecured loans, Zero percent cards, interest rates at 12:49 pm by Steve Smith
Your credit card should be considered as a convenient tool that will help you with your cash flow and budgeting your finances. When you use your credit card, you can defer payment on purchases for up to two months without having to pay interest on it, but only if your credit card has an interest-free period. Typically most credit cards have interest-free periods on purchases for up to 56 days from the day of the purchase. If a repayment on the product is not received before the interest-free period, the credit card company will charge you interest and backdate the interest from the date of the original purchase. If you keep track of your purchases and pay off your credit card balance off in full each month, a credit card can be an extremely useful tool.
If you fail to pay off your balance in full by the end of the month you can easily fall into debt fast. If you miss a payment you may discover that your mistake will become extremely expensive. Most credit cards charge interest from the original transaction date until the entire balance has been cleared. Paying just the minimum monthly payment on your card will prolong your debt and only increase the amount owed on your purchases because of the interest that the credit card companies are charging. This in effect makes your outstanding amount an unsecured loan at a very high rate of interest.
If you use your credit card, you must think of it as a useful tool and use it wisely. If you are not careful you can quickly fall into debt with the interest rates charged by your credit card company as well as any late fees or other charges that your credit company may charge.
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Thu 29th Mar, 2007
Posted in Bank charges, Banking, Borrowing, Consumer Credit, Consumer debt, Credit Card, Debt management, Financial news, Personal loans, UK Finance, interest rates at 8:58 am by Steve Smith
Hundreds of consumers who went into the red on their overdraft accounts are fighting the unfair charges in court. Dozens of consumers claim they are hit not with £40 overdraft fees, but with fees in excess of £200. Many consumers claim that the fees are making it impossible for them to get out of their overdrawn state and want to stop the unfair charges from piling up.
One small business claims they have been hit with £3500 in charges in the last five year. Whilst we cannot disclose names of those currently pursuing their claims through court, these incidents of banks taking advantage of consumers are widespread and cases are likely to be hitting the news soon.
One woman who responded to our query was told by her bank to take out a credit card from them to clear her overdraft and pay off the unfair charges.
It is paramount to an illegal act to force consumers to take out a high-interest unsecured loan to cover unfair charges on a low interest loan like an overdraft.
Complaints against banks have soared in recent months, according to the Banking Code Standards Board Banks. The banks have been accused of ripping off customers with the high charges, imposed for minor account problems, with most about complaints covering interest rates and unfair charges.
As more claimants seek advice from charities and the Financial Ombudsman Service, the numbers of claims and the value of those claims will increase. This is good news for many consumers who are facing high interest rates on these loans.
However, experts warn that banks are out to make money and will grab it where they can from their customers. If overdraft penalties are deemed unfair, banks will simply create charges in other areas and these could easily hit all customers, not just those in the red!
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