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Fri 28th Sep, 2007
Posted in Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Financial news, Borrowing, Car finance, Car loans, Personal debt, Debt management at 12:13 pm by admin
Recently Barclaycard came out with a new credit card called the Barclaycard Breathe, which is a card that claims to offer a greener solution by offering 50% of Breathe profits to be donated to environmental projects dedicated to reducing carbon emissions around the world. Breathe has also claimed to offer a greener customer experience with no paper statement, environment friendly produced credit cards, and a credit card recycling scheme for the old cards. Breathe customer’s will also benefit from discounts such as £50 off British Gas home insulation and other offers. Despite all these benefits, one has to ask whether using a green card is worth it.
The size of the Barclaycard Breathe contribution to the environmental projects depends on the profit levels that are made by Breathe. This means that the further you are in debt the more Breathe will contribute, as profits will be generate by cardholders who rack up their interest payable as they are unable to make more than the minimum monthly repayments. Those who pay off the entire balance on the credit card every month will find that their contribution will be minimal. Although you will be making a contribution by paying off your debt on time, you will find that you can make an even bigger contribution by falling into debt and sinking into the red zone. This is not the ideal solution to help protect the environment. So before selecting a credit card that sounds good, you will want to research the product and ensure that it will be as good as it claims.
Consumers who are prone to debt on their borrowings are wiser to take out cheap loans to cover their expenses and look at other ways of helping the environment. For example, using a ‘green’ credit card to pay for repairs to an old car is not as environementally friendly as taking out a personal loan to buy a more fuel-effiicent model, and yet once interest rates are accounted for, both can cost the consumer the same amount.
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Posted in Consumer Credit, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Borrowing, Personal debt, Debt management at 11:59 am by admin
One of the most common methods of making a purchase is on a credit card or store card. Shopping is fun. It is one of the most popular methods of relaxation and amusement. There is nothing more fun for a woman than spending an afternoon with friends, browsing the shops, looking for a special pair of shoes or a dress.
Shopping alone is not a serious problem. It is easy to leave the £200 pair of shoes at the store, but shopping with friends can make it harder to use common sense.
Many people spend hundreds of pounds when they are shopping, buying clothing, shoes, and jewellery they may never wear, and do not need.
However, the purchase of a £200 pair of shoes will come back to haunt the buyer for a long time. When a purchase is made on a credit card, the interest is calculated until paid in full.
When the minimum payment is made each month the interest continues to be calculated until the entire £200 is paid off.
The credit cards go one step farther to increase their profits. The largest purchases are paid last. That means, a £200 pair of shoes may not be paid off for months, adding 25% to the capital yearly. It is very easy for that pair of shoes to cost £300, or more, before the final debt is paid off.
A single shopping spree can still be costing the shopper, in interest, a year later. To reduce debt and protect your credit rating, shoppers should budget their shopping, and try to keep the balance on their credit cards low. If you are still paying off shopping sprees long past, consider a debt consolidation loan. This type of loan is used to bring together store cards, credit cards and other bills under one umbrella, preferably at a low interest rate, with maximum payments each month to clear the debt quickly.
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Wed 26th Sep, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Homeowners, House buying, First time buyers, Property, Housing news, Borrowing, Secured loans, Home Improvements at 12:10 pm by admin
The housing boom is helping countless UK homeowners build wealth. The increase in house prices, compounded by smart equity building schemes, are helping homeowners walk away with fifty to one hundred thousand pounds in profit.
Building equity does not require a large investment. In many cases, some minor improvements can dramatically improve the value of a property. One of the quickest ways to improve the chances of selling a home at a profit is by adding luxuries. Another way is to have a professional decorate a and furnish a room, and sell the furniture with the home. These are relatively low cost methods of improving your chances of selling a home quickly, and for a nice profit.
A short term secured loan is a cost effective method of adding luxuries. Many homeowners are unable to resist the added comforts like sunken bathtubs, walk in closets, arboretums, or entertainment rooms.
A more practical method of increasing a home’s chances of selling is to add features that will remain when the home sells. Modern front loading washing machines, stylish refrigerators, built in home theatres, modern water heaters, water and air purification filters will all make a home stand out from the rest of the neighbourhood.
The more a home stands out, with products the buyer may keep, will not only increase the speed it takes to sell a home, but it also increases the amount a homeowner can ask for a home.
This is called perception selling. A homeowner may borrow a home improvement loan of twenty thousand. Then buy appliances and electronics and use them to increase the value of the home by thirty thousand.
Many home buyers will not realise that they are being charged an extra ten thousand for the appliances. All they will understand is that they can move into a house pre-fitted with all the luxuries with none of the hassles of choosing and fitting them themselves, so they are getting value for their mortgage money.
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Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Credit record, Borrowing, Personal debt, Debt management, Missed payments at 10:56 am by admin
Credit card providers are now required to show customers just how much interest they are being charged and have been limited to charging customers only £12 on late payments. Although the late payment charges have been reduced there are many customers who are failing to meet their monthly payments, with a total of £230 million being charged in late fees last year. Some may miss their payment simply because they have forgotten, whilst others are struggling to make ends meet on bills and loan repayments. Some may think that a £12 late fee is not much, however the late payment charge is more than an irritant.
If you miss a credit card payment you will find that you will not only be charged the £12 fee, but you may also lose the special rate on your credit card. Often credit card issuers reserve the right to raise your credit card interest rate if you break the terms and conditions of your contract, which will end up costing you more than just a mere £12. You may also discover that your late payment will affect your credit report, and if you miss more than one, lenders may look upon this as a negative mark against you putting you at risk of attracting higher interest rates on other financial products, such as mortgages and personal loans.
One way of ensuring that your payments are made on time is by setting up a direct debit. This way your credit card bill will always be paid on time and you can easily avoid any credit card late-payment fees.
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Thu 13th Sep, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Remortgaging, Homeowners, Financial products, Property, Financial news, Borrowing, Equity release, Secured loans, Home Improvements at 12:48 pm by admin
With all the debt management products on the market, the most overlooked is leveraging equity from the home. The practice of releasing equity to manage debts, improve lifestyle, or add equity to property is not new. However, the idea of releasing equity from your home and using the money to build wealth is a recent notion.
In the past, people worked to pay off their mortgage and escape debt. Today, people are releasing that equity, investing it in businesses, property, and stocks, and building wealth.
This wealth is then returned to the investment fund and used to continue building wealth. This is fairly secure, as long as the investor doesn’t become involved in any high-risk ‘get rich quick’ schemes.
Financial companies are becoming familiar with the concept of leveraging the money in your home to build wealth, instead of hoarding it. A cautious person can release the equity in their home, and earn enough money in 10 -15 years to restore the money.
With a good investment strategy, the homeowner will have their home loan repaid before the end of the mortgage term, and give the homeowner thousands in profits.
Playing it safe can be dangerous. Many people will not hesitate to apply for a second mortgage, or a secured loan to help them escape an emergency. People will draw equity from their home when they are ill, lose their job, or have a family crisis. However, they will not withdraw the money to build wealth.
Prevention is a better strategy than waiting until you are in trouble and then trying to dig yourself out of the hole.
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Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Negative equity, Debt management at 12:46 pm by admin
According to a report from Fitch Ratings, Britain’s economy has been rated as one of the most vulnerable to a property crash. The report went on to state that the property in the UK is 20% overvalued, coming in second behind France.
Other countries that were reportedly the most exposed to economic problems were not only the UK but Denmark and New Zealand as well, especially if the property prices weakened and interest rates increased. The report from Fitch also reported that house prices have been far more than the income received by Britons over the past ten years, with the average house now costing £196,500 and the average gross salary at £23,250.
All this is bad news for those overstretched by home loans who could end up in negative equity if or when prices fall.
The report from Fitch assessed a number of indicators of household vulnerabilities as well as house price valuation measures, which has indicated a record level of household debt. The high household debt is considered to have come from the rising interest rates as well as the many years of strong house price inflations, not only in the UK but in other countries as well. New Zealand was rated the top economy that was most vulnerable with Denmark ranked second and UK as the third most exposed. The reason as to why Britain fell into third was due to the high household net worth and the lower debt servicing costs that helped household finances to be less at risk should prices tumble. The report from Fitch went on to report that in some economies there was evidence of oversupply with more properties being built than household created with the UK’s new households outstripping the supply of property.
The news for borrowers then is to beware of taking out 100% or more home loans, especially on an interest-only basis, with a view to making money when the property sells. With the current housing situation, households could end up in a negative equity situation. This is not a problem for those looking to sit tight until prices rise again, but is bad news for those tempted to overstretch their credit on cards and cheap loans.
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Fri 7th Sep, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, Property, Financial news, Borrowing, Secured loans, Debt management at 12:51 pm by admin
A brief look at the UK mortgage market will show that less and less fixed rate deals are being offered by banks to customers. Added to this is the fact that many of the deals that are offered look extremely unattractive to borrowers because the rates are just seen as being too high. However, research shows that the best fixed rate loans are not that far higher than the variable rate deals and there are still some good deals out there to be had. The problem is that these deals are often only offered for a very short period by the bank and customers are not having the time they need to take up the offers.
Another issue with the fixed rate deals that are available is that many of them are charging very high fees. It looks as though, if you want a fixed rate mortgage these days, you are going to have to pay a hefty premium just to get your hands on one. Most fixed rate home loans are also charging fairly punitive early redemption fees so if you think that you are going to be moving again in the near future, or want to have the choice of re-mortgaging your home when rates are lower, the option may not be open to you.
The best advice is simply to decide very carefully what type of mortgage you need, and not simply chase the lowest rates. If you cannot afford the risk of another rate rise, then opt for a fixed rate, even if it means paying high fees.
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Posted in Consumer Credit, Personal loans, UK Finance, interest rates, Consumer debt, House buying, Spending, Property, Financial news, Borrowing, Secured loans, Debt management at 11:51 am by admin
For many people, their wedding is a pivotal point in their lives. They are ending an old phase, and starting a new. It often involves a move, combining households, and learning how to cohabit with another person. There are a lot of concerns that go beyond picking a wedding dress and caterer.
Setting up a routine can be a stressful period. Once the honeymoon is over, then the real work begins. Many people take out personal loans to finance their wedding. However, few think of investing in the ‘after wedding’ period.
One of the most important considerations should be lowering debt so that the new household is not forced to scrimp and suffer while the couple is adjusting to life with another person.
The burden on the family can be reduced even more if the couple spend the year before the wedding improving their credit rating. In fact, one of the smartest moves a couple can make is to take a debt management course together.
This way both adults can take responsibility for the household finances and work together as a team to stay out of debt. This solves the problem of forcing one person to be responsible for the debt accumulated by the other. Many of today’s bankruptcies are the direct result of secret debts.
Lowering debt, and improving your consumer credit information and rating, are vital. They will reduce the amount of interest paid when applying for a personal loan to cover the wedding expenses. And will make it easier to rent or buy a home.
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Tue 4th Sep, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Remortgaging, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing at 10:22 am by admin
Many analysts are warning consumers not to panic. Even with 5 interest rate increases in less than a year, it takes a clear look at the overall market to understand the UK mortgage industry.
Lisa Taylor, Analyst at Moneyfacts.co.uk, said:
“We must remember that historically interest rates are still quite low, but a lot can happen in 25 or 30 years, with changing government policies, economic cycles and potentially closer alliance to the European markets.
“The long term fixed rate deals are not uncompetitive, while slightly higher than the best buy deals for 2 and 3 years, they still offer a decent rate and… charge a reasonable fee. But the real beauty and potential cost saving with these deals, comes by way of fees. Assuming today’s average arrangement fee of £800, switching providers every couple of years could add on an extra £9600 to your mortgage in fees alone.”
Taylor recommends sticking with a loan rather than jumping around to get a better rate. She says that by doing so consumers: “will also avoid having to pay exit fees, valuation and legal costs.”
However, Moneyfacts admit there are downsides to sticking with a five, 10 or even 25 year home loan:
“Aside from the rate gamble, the other major disadvantage of signing up for a long term deal, is that they don’t easily cope with lifestyle changes,” says Taylor. “If you need to unlock from the deal, or house for any reason then you must remember there will often be some hefty redemption charges to pay. Lenders such as Cheshire, do offer some degree of flexibility allowing several windows throughout the mortgage, whereby borrowers can overpay without penalty.
Many debt management companies are urging consumers to consolidate and switch their products. This is good for the new company, who earns a fee, but bad for consumers forced to pay extra fees and higher prices.
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Posted in Consumer Credit, Banking, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Financial news, Borrowing, Personal debt, Debt management at 10:20 am by admin
The advent of the new Breathe credit card from Barclaycard has received a mixed response from the public and from charities. While the new card claims to be the most environmentally friendly card on the market, and the company has promised to donate half of all profits from the card to environmental charities, with a minimum of one million pounds being donated in the first year of operations, many say that the direction that the banks are taking here is not appropriate.
A recent survey showed that most consumers are ill-informed when it comes to their own debt with over a fifth saying that they were worried about the debts they owed on credit cards and personal loans. The average consumer also believes themselves to be about five thousand pounds in debt while the Bank of England claims that the average is a lot closer to ten thousand pounds.
What all of this has led critics to say is that despite the supposedly good intentions of banks and credit card companies in offering environmentally friendly products, what they should really be doing is helping people keep their debt under control rather than offering new gimmicks that are unlikely to have much of an impact over the longer term. Most people, according to a recent survey, claim that they would rather see banks informing people about debt management and offering services to help them get their finances under control rather than offering environmentally friendly products. Perhaps the new green credit cards will prove less popular than had been hoped.
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