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Fri 30th Mar, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, Spending, Property, Financial news, Borrowing, Personal debt, Secured loans, Bankruptcy, Debt management at 12:53 pm by admin
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 Consumer Credit, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Unsecured loans, Borrowing, Personal debt, Debt management, Zero percent cards at 12:49 pm by admin
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 Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, interest rates, Consumer debt, Financial news, Borrowing, Bank charges, Debt management at 8:58 am by admin
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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Posted in Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, interest rates, Savings, Consumer debt, Borrowing, Personal debt, Debt management at 8:52 am by admin
There are many people who would like to put aside money each month into a savings account, however many people say that they never have enough money left over to do so. However, if you look at your spending habits and prepare a budget you will find that you do in fact have enough money to set aside into a savings account each month.
The first step to saving is by watching your spending habits and keeping an eye on where your money goes. You should start by keeping a log on your spending by writing down everything you spend your money on for two weeks or more. When you do this, you will be able to look back on all the items that you purchased and be able to see what purchases were necessary and what purchases you could easily avoid spending money on. If you discover that you are spending more money that what you are earning, then you will need to start cutting down on unnecessary expenses.
Once you see where you can cut expenses, you can then start on a budget that suits your lifestyle and your needs. Prioritise your spending and ask yourself if you really need it whenever you reach to buy something. With the money you save by cutting down on unnecessary expenses, you will then be able to open a savings account and start putting aside the amount each month.
Once you have established a savings you can then use the money as an emergency fund, or you can use some of it for a down payment on a new home or car, or you could use a bit of the savings for a well-deserved holiday. It all depends on what you are saving for.
If you are in debt, whilst it is not undesirable to save money, you would be far better putting your spare money towards paying off any credit card balances or clearing personal loan debts. The interest earned on savings is never as high as that charged against outstanding credit.
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Wed 28th Mar, 2007
Posted in Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, Credit Card, interest rates, Remortgaging, Consumer debt, Financial products, Spending, Property, Balance transfer, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management, Zero percent cards at 10:27 am by admin
One in seven adults have turned to debt consolidation in the last three years to eliminate their debt. At least 360,000 people, 6 per cent, borrowed a loan of £50,000.
Millions of UK consumers have taken out unsecured loans or remortgaged their homes in an attempt to consolidate their debts. The average debt consolidation loan in Scotland is £14,439, the highest in the UK.
MoneyExpert.com, surveyed 2,500 adults. More than 36 per cent of those consolidating debts used an unsecured personal loan. Just over 15 per cent transfered their debt to a zero-rate credit card. At least 18 per cent remortgaged their home.
Edward Dickson, a financial adviser, said: “If you must consolidate your debt, the most sensible option is to go through your existing mortgage as opposed to through independent companies, simply because you will get a much better rate.”
Sean Gardner, the chief executive of MoneyExpert.com, said: “The UK’s debt crisis is a serious concern and borrowers are starting to feel the strain. Debt consolidation is entirely sensible and a good way to get your finances under control if you owe money to different lenders at varying rates of interest.
“However, it only works if you accept consolidation is a wake-up call to get your borrowing under control and then work to become debt free. There has to be concern that many people simply see consolidation as a way to keep on borrowing.”
Some analysts are worried that consumers are being turned away from affordable secured loans for debt consolidation loans. Banks profit more from a remortgage or a personal loan than they do from a low interest unsecured loan.
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Posted in Consumer Credit, UK Finance, Credit Card, interest rates, Financial products, Spending, Credit record, Unsecured loans, Borrowing, Zero percent cards at 10:25 am by admin
When you apply for a credit card there are two main sources of information that credit card lenders base their decision on whether to will lend to you or not. Lenders base their decision on your personal details and information as well as your credit history. If you have a good credit history credit lenders will be more willing to lend to you.
When you are filling out a credit card application form, you should never use false information on your application. Don’t be tempted to lie on your application for credit cards as they will show up on your credit report and lenders will quickly discover your lie. If you exaggerate your income level or give inaccurate information this will turn credit lenders off lending to you.
When applying for credit be aware that the process of your application may take longer than you expect, so be patient while waiting for a response on your application. This is especially important to take into consideration if you plan on transferring a balance from one card to another where an introductory period of interest-free credit card is about to expire. Typically the process of the application will take around ten to fourteen days to process before you receive your credit card. Then you will need additional time to activate your card. If you need a credit card right away then you may want to consider using an instant reply application for your credit card, as you will receive a reply a lot quicker than you would with the standard credit card.
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Tue 27th Mar, 2007
Posted in Consumer Credit, Personal loans, UK Finance, Financial products, PPI, Unsecured loans, Financial news, Borrowing, Secured loans, Bank charges, Insurance, Debt management at 11:16 am by admin
The Office of Fair Trading has referred Payment Protection Insurance (PPI) market to the Competition Commission. However, they have taken no action. The industry is starting to complain, claiming that a decision is ‘long overdue’. The PPI market grew 19 per cent a year since 2000.
A recent USwitch study showed that consumers are overpaying up to £3,973 too much when buying a PPI with a loan. There is a remarkable difference between the cost PPIs from independent providers, bank, or building societies.
USwitch’s director of financial services Nick White claims that banks charge five times more than independent providers, citing examples that show how consumers can save than £3,000 simply by switching their PPI provider.
Nick White commented: ‘It’s not surprising to see that the Competition Commission is now involved in this investigation as the high street banks and building societies currently account for 80 per cent of all PPI policies sold. This is mainly because consumers are not shopping around and looking at the standalone policies which represent much better value for money.’
USwitch is one of the firms that called for the Competition Commission to take action. They want lenders to adjust percentage rates to make it easier for consumers to see the difference in their loan cost before, and after a PPI is included.
Consumers should ask for a loan quote, before and after, a PPI is included. They should also become wary if the loan officer uses high pressure, or unfair sales tactics to sell the PPI. Some sites suggest that most consumers are never give a clear cut total of their PPI, resulting in many loan customers believing that their PPI is much lower than normal.
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Posted in Consumer Credit, Personal loans, UK Finance, interest rates, Financial products, Unsecured loans, Borrowing, Secured loans at 11:14 am by admin
If you are applying for a loan, the first rule is to shop around to ensure that you receive the best deal. If you go for the first offer that you receive, you may end up paying hundreds or even thousands extra on interest charges. So be aware, search and ask around at several banks and lenders to see what deal you are able to receive.
If you have found a good deal, but you would feel more comfortable sticking with your own bank, it would not hurt to ask your bank if they are willing to match the deal from the other lender. Your bank may actually match what the other lender is offering. It is worth searching for deals from a number of lenders, as you could save yourself a lot of money in interest charges. Also if you end up finding a better deal after you have already signed for another loan you may regret your decision, as you could end up being penalised for paying off your loan early.
As you are searching for the best loan on the market, you will want to make sure that you ask for a quotation instead of making an actual application. If you make a number of application it can affect your credit rating, which could turn lenders off from allowing you to borrow from them. If you make a number of quotation inquiries, it will show up on your financial history, however it will only show up as a quotation and it will not affect your credit rating the way a number of applications will. Always make sure that you clearly state that you are only interested in a quotation, not an actual application.
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Mon 26th Mar, 2007
Posted in Bad Credit, Consumer Credit, UK Finance, Credit Card, interest rates, Consumer debt, Spending, Financial news, Borrowing, Personal debt, Bank charges, Debt management at 10:02 am by admin
Many consumers are reeling under the new fees, interest rates, and demands of the credit card companies. After the Office of Fair Trading capped the fees credit card companies applied to consumers, the number of credit card applications dropped dramatically.
Now, after serious levels of bad debts, credit card companies are playing with the small print in their contracts to recoup their loss – at consumer’s expense.
Michelle Slade, personal finance analyst at Moneyfacts.co.uk, said: ‘Battling with rising bad debts, Bank of England rate increase and a huge loss in revenue from the capping of default fees, credit card providers have been forced to look for other ways to maintain their income stream.’
She added: ‘I wonder if the Office of Fair Trading knew or appreciated the consequences of their default fee capping actions, as now many more borrowers are being hit by higher rates and fees, whilst those who abuse their credit facility are let off more lightly.’
Lloyds TSB will forcing 50,000 of their most prudent credit card customers to pay an annual fee of £35. This fee will penalise account-holders who rarely use their cards, and pay off their balance in full each month.
Sandra Quinn, communications chief at APACS, said other banks will follow quickly.
‘This - the introduction of annual fees - is a natural outcome to the work the OFT did last year on default charges,’ she said.
‘If you have lost one area of income, all credit card issuers will be looking at other ways to get income. They are not charitable organisations. The message is either use your card or cut it up.’
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Posted in Consumer Credit, Personal loans, Debt Consolidation, UK Finance, interest rates, Financial products, Spending, Unsecured loans, Borrowing, Car loans, Secured loans at 10:00 am by admin
There are several reasons why someone may take out a personal loan, such as to purchase a new car, pay for a wedding or holiday, or to consolidate and pay off your debts. Whatever the reason may be, there are a few things to consider before you sign the loan documents.
When you borrow, you must remember that the more money you borrow, the more interest you will pay, so you should only borrow the absolute minimum that you need. You will also need to know that the more time you take to repay your loan, the more you will end up paying on interest, so keep the length on the term of your loan to a minimum.
Many banks will advertise a low annual percentage rate on a personal loan, however be aware that you may not necessary be qualified for this low rate. The interest rate that you receive depends on your personal circumstances, and if you have a poor credit history the lender may charge you a higher interest rate. The APR on a loan is not necessarily the best way to measure what the best loan will be for you. Lenders often find a way to make the APR to appear lower. So the best way to compare loans is to look at the total amount repayable. The total amount repayment on a loan adds up every penny that you are expected to repay which includes all the monthly repayments, fees and charges. The lower the total amount repayable on the loan, the better the deal on the loan.
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