Inter Financial Weblog

 

Archive for May, 2007

Inflation Set to Increase Bad Debt

Thursday, May 31st, 2007

March’s inflation increased to 3.1 per cent which is set to trigger increases in bad debt and house repossessions according to figures from Experian’s independent economic consultancy.

“The rise in inflation heralds a further increase in interest rates to 5.5 or even 5.75 per cent, with even more increases on the way,£ comments Dr Neil Blake, Experian’s Managing Director. “Not only will interest rate increases have a dampening impact on economic growth and inflation, but there will also be a likely knock-on impact on bad debt. This is something that lenders will be well aware of, but many consumers will also need to consider carefully their future circumstances when assessing their financial position. Rising bills coupled with the existing and possible future interest rate rises should be taken into account by borrowers.”

Dr Blake continues: “This is a result of the current and predicted levels of debt relative to income in the UK and the impact of the increases in interest rates that have already happened. Even if interest rates fall back in 2008, as the current Business Strategies published forecast suggests, write-off rates and repossessions are still expected to continue increasing until 2009. Any further interest rate rises are bound to add further to future levels of financial stress.

“Too big an increase in interest rates could easily push the economy over the edge, leading to a situation where consumers lose their appetite for spending and banks lose their appetite for lending growth altogether. This scenario would almost certainly push the UK economy into recession, leading to an overshooting of the inflation target being replaced by an under-shooting. This is an outcome that is in nobody’s interest and is one that the MPC and the industry will be working hard to avoid.”

The entire financial community is set on edge to see what happens.  Companies that issue bad debt loans and debt consolidation loans may continue to enjoy unheard of profits, while banks pick up the losses.  In the end, the consumer is expected to be the biggest loser.

Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Debt Consolidation, Debt management, Financial news, Homeowners, House repossession, mortgages, Personal debt, Personal loans, Property, UK Finance | No Comments »

Credit Card Offers

Thursday, May 31st, 2007

Many people set out in search of the perfect or ideal credit card and become disappointed when they find that most credit card offers will only be able to offer just one benefit. There are many different types of credit cards available and you may find that there are some credit cards that are suitable for you, and other credit cards that are not suitable for you. With so many credit cards to choose from it can become a hard, and confusing, task to find the right credit card for you.

Whatever type of credit card you are looking for, whatever type of lifestyle you have, the amount of money you are looking to spend, or how you plan to use your credit card you will always want to find a credit card that offers a low interest rate, or APR. The APR is the amount of interest that you will be charged on your purchases, so the lower the rate, the better. It would be ideal to apply for a credit card with a 0% interest rate for the first 3 or 6 months. However with a 0% interest rate credit card, you will want to make sure that you are aware of the typical APR that you will be charged once the introductory period is over. You will also want to make sure you are aware of when the introductory period is over to avoid any interest charges.

You will also want to choose a credit card that is suited to your needs and interests. The interest rate is the most important aspect of a credit card, however if possible you will want to benefit from other offers from credit cards, such as a rewards program or an air miles credit card. If you know that you will be making regular purchases on your credit card and you will be paying off the balance in full each month, you may benefit from a cash rewards credit card.

Although you may receive offers from a credit card company that sound really good, must always read the fine print before applying for the credit card. You want to make sure that you make yourself aware of any hidden charges and fees that the credit card may be entitled to charge you.

If you are looking to make a large purchase and pay it off over time, don’t assume that a credit card is the best means of unsecured credit. A personal loan can offer the same introductory interest offer but over the life of the repayments, so shop around before making your final selection.

Posted in Borrowing, Consumer Credit, Credit Card, Financial products, interest rates, Personal loans, Spending, UK Finance | No Comments »

UK Economy Survives Global Instability

Wednesday, May 30th, 2007

The central bank said that the fear of a shock caused by global imbalances has diminished after growth accelerated in Europe and Japan and slowed in the U.S.

The bank’s assessment of the risk from consumer debt follows record bankruptcies exceeding 100,000 households in 2006. The ‘significant rise’ in loan defaults is due in part to tighter lending standards, but the bank’s lending to high-risk consumers such as teens and the elderly has also been blamed.

There were fears that an increase in bad debts and the greater mortgage burden carried by many UK households, combined with a crash in the US sub-prime lending market, and a short crash in the Chinese stock market, could all bring the UK economy crashing to the ground.

However, the strong UK economy, and continued lending of personal loans and mortgages, has buoyed the economy.  This is good news for many consumers, as it lowers the risk that interest rates will grow beyond the newly predicted 7 per cent.

The housing market is feeding the UK economy and causing an anomaly that has many economists worried.  The high level of expendable income invested on mortgages has had an adverse effect on the retail industry.  This may trickle through all segments of the economy, creating a long-term slow down.

The UK economy has traditionally been more self sustaining than most economies by some standards, leaving many analysts and economists predicting that foreign problems will not pose a serious threat to the UK economy in the near future.

Posted in Bad Credit, Bankruptcy, Borrowing, Consumer Credit, Consumer debt, Debt management, Financial news, interest rates, mortgages, Personal debt, Personal loans, Property, UK Finance | No Comments »

« Older posts