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Fri 28th Mar, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, Banking, UK Finance, mortgages, Consumer debt, Homeowners, Property, Financial news, Borrowing at 12:18 pm by admin
It has been revealed that the Chancellor Alistair Darling has a mortgage with the beleaguered lender Northern Rock, however he does not have any savings with the bank.
The Chancellor admitted that he had a home loan with Northern Rock while making a statement to the House of Commons about greater protection for depositors to the bank.
The Chancellor has promised to introduce new legislation in 2008 in which investments and deposits of customers would be guaranteed in the event of a banking collapse.
While the Chancellor has not yet specified an exact figure it is predicted that savings up to the value of £100,000 would be covered. The current rules mean that the FSA’s compensation scheme covers 100% of deposits of up to £35,000. However Alistair Darling has called for a more comprehensive change.
The new legislation is designed to reassure depositors when there is a problem with the Bank the save with. The aim is also to help strengthen the UK’s position as a leading financial centre.
The current structure has come under heavy criticism in recent weeks following the run on Northern Rock. The confusion and lack of communication between the Financial Services Authority, the Bank of England and the Treasury which are all currently partly responsible for the present system has been blame for causing the first run on a bank in more than a century.
The banking industry is strongly against the new proposals however stating that a £100,000 guarantee is just too high. The credit crunch is having a nasty effect on both those with savings and those holding or seeking loans.
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Posted in Consumer Credit, UK Finance, mortgages, Consumer debt, Card fraud, Unsecured loans, Financial news, Borrowing, Personal debt, Bank charges, Fraud, Missed payments, Overdrafts at 12:15 pm by admin
Since their introduction building societies and banks have been claiming that chip and pin technology is foolproof. However a new flaw at the heart of the design to prevent fraudsters from stealing your money has been exposed.
Many cash withdrawals are being carried out using cards that do not have a security chip and the shocking thing is that it is the banks themselves that are allowing this to happen.
This is how it works. Currently there are roughly 140m cards in circulation in the UK and every day an average of 7m withdrawals are made from UK cash machines. Now it is only to be expected that some of these cards will be slightly faulty therefore if banks were to reject cards with a slight fault they would then be inundated with complaints from angry customers who could not withdraw their own money.
This has left the door open to fraudsters who can use cloned bank cards that do not come with a chip to get their hands on other peoples’ cash. This leaves bank claims that the system is foolproof as completely false.
The banking industry trade association for payments has admitted that an undisclosed number of the UK’s 60,500 cash machines will allow cloned cards to withdraw money provided the cloned card is used with the correct pin number.
Because bank customers are not protected from fraud in the way that credit card holders are, account holders could find themselves fleeced of their entire balance with no redress. Not only are people finding themselves without the money to meet their home loan repayments or rent, they are going into unauthorised overdrafts and forced to borrow money to cover the shortfall.
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Mon 17th Mar, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, Consumer debt, IVAs, Financial products, Spending, Unsecured loans, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments, Overdrafts at 11:53 am by admin
If you find you are having difficulty in repaying your debt one option that is always open to you is to seek an individual voluntary agreement (IVA) from a specialist lender.
Under the terms of an IVA, if you own greater than £15,000 you can try and reach an agreement with your lender in which you only pay back a percentage of the loan or all of it, but the interest charges are frozen.
In the first 3 months of 2007, 11,300 Britons entered into such agreements with their lenders. That is a 50% rise one the same period in 2006 and goes to show how difficult many households are now finding it to deal with debts held in personal loans and credit cards.
However the problem is that now many lenders are taking an increasingly tough line on accepting IVAs. It used to be the case that many lenders would accept repayment on 25% of the loan or debt, however now that figure has gone up drastically and it is becoming increasingly difficult for many borrowers with severe debt problems to even repay their IVAs.
For example HSBC will now only accept an IVA if the borrower agrees to pay back a minimum of 40% of the loan while the student loan company will not allow their debt to be subject to any form of IVA or bankruptcy.
Northern Rock should use its own example when considering individuals in debt crisis. The crisis-hit bank rejects IVAs as standard practice. This is now becoming common practice from many lenders.
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Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, Credit Card, Consumer debt, Financial products, Borrowing, Insolvency, Personal debt, Bankruptcy, Debt management, Missed payments at 10:46 am by admin
Imagine you are in the situation where you actually want to pay off all of your debt but your lender will not allow you to. This is a common situation faced by thousands of borrowers across the UK each month.
The problem arises from the fact that in order for many of these borrowers to be able to repay their existing debt they need their lender to freeze the debt they currently have, in effect stop charging interest on their credit card or loan. This will than give the borrower a much higher possibility of repaying the loan instead of going into bankruptcy. If a borrower was to be declared bankrupt, then the bank certainly wouldn’t get all its money back.
In order to freeze debt the borrower must enter into an agreement with the bank. However many lenders do not like to do this as they view these agreements as losing them money – the interest that they make their profit on.
Many borrowers cannot afford to repay any more than the minimum repayments on their credit card each month. This means the possibility of actually clearing their debt is almost impossible, as interest repayments become a larger and larger part of the debt (monthly credit card interest often matches the minimum repayable, so the debt doesn’t diminish).
Applying for an individual voluntary arrangement (IVA) is one way of solving your debt problems. Under these agreements, those owing over £15,000 agree to repay a percentage of all of the money owed typically over a period of five years.
The trick is in negotiating with lenders to freeze interest repayments. This in effect prevents the debt from growing any further. However many lenders refuse to enter into these agreements.
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Fri 7th Mar, 2008
Posted in Consumer Credit, Debt Consolidation, UK Finance, Credit Card, interest rates, Financial products, Spending, Borrowing, Personal debt at 12:23 pm by admin
Credit card companies have been in a battle recently offering more and more cash-back deals in a bid to attract more customers, however many of us are still ending up with the same old raw deal on borrowing money.
It is now estimated that roughly one in every 10 credit cards comes with some sort of cashback scheme. However one credit card comparison website has found that the average cash back on these type of credit cards is now just 0.72% and this figure falls to 0.5% if you don’t include a recently launched cash-back credit card from Abbey which offers 5% cash back on certain purchases from certain stores.
What this means for the consumer is that if you were to spend £4000 over the course of a year then you could expect to get somewhere in the region of £28.80 cash back from your credit card provider. Not a big enough some to influence to merit a cash-back card over a lower interest card with no gimmicks.
An average payback of 0.72% is very low so you would be well advised never to opt for a card just because of its cash-back offer. Especially since if you don’t pay off your balance every month then any cashback you might be entitled to will simply be wiped out in interest repayments.
However there are a couple of good deals out there if you are willing to shop around. The one set-back of these deals is that they typically only last for a limited time period before ending and then you could be left with a very uncompetitive rate.
Customers who have racked up a large amount on credit cards are advised to consider a debt consolidation loan. This allows you to clear your debt at a much lower interest rate.
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Posted in Bad Credit, Consumer Credit, Personal loans, Banking, UK Finance, mortgages, Consumer debt, Homeowners, Financial news, Borrowing at 12:21 pm by admin
Matt Ridley, the ex-chairman of Northern Rock claimed that the reason for the bank’s crisis was the result of a completely unpredictable chain of events.
Matt Ridley made the claim while appearing before the Commons Treasury Committee, insisting that the events of last year were completely unforeseen not only by Northern Rock but by all experts and banks.
Despite his claim to the contrary Mr Ridley still faces accusations from many angry MPs who believe that under his leadership the bank made some basic banking errors as the crisis was unfolding and then failing to appear in public to calm the speculation during the crisis. MPs have accused him of ‘clinging to office’ after the bank was forced to turn to the Bank of England for emergency funding.
However Mr Ridley has stated that Northern Rock had been trying to diversify its sources of funding before the events of September however it could not have predicted the global credit crunch following the collapse of the Sub-prime or ‘bad debt‘ mortgage sector in the US.
Since then thousands of savers, homeowners and loan holders were put through the mill, not knowing whether their investments were safe until the Bank of England stepped in.
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Wed 5th Mar, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, Consumer debt, Homeowners, Financial products, Property, Financial news, Borrowing, Secured loans at 12:59 pm by admin
The advert watchdog has found that an advert for the loan company Picture Loan has misled consumers by suggesting that it was very easy to borrow large sums of money.
The advert shows a women walking around her home while talking on the phone to a Picture Loan advisor. While she is securing a loan of £25,000 she is also shouting instructions to her child to on where they might find their lost items. As well as this she is also talking to her husband.
The Advertising Standards Authority (ASA) received six complaints from viewers of the advert who claimed that the advert was misleading because it portrayed borrowing large amounts of money as an everyday occurrence that could be treated very lightly.
The ASA did acknowledge that the ad contained a number of warnings in that it warned borrowers about the nature of the service as well as the typical APR and how much monthly repayments would cost. However, the ASA still found that debt consolidation was a very serious matter that needed careful considerations before any decision could be made.
What the ASA ruled was that the light-hearted nature of the advert suggested that debt consolidation did not need careful consideration. ASA has ruled that Picture should not broadcast the advert again in its current form.
Picture has responded by stating that the nature of the advert was to illustrate the busy lifestyle that many borrowers lived as well as the demands that each of us face in our day to day living.
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Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Homeowners, House buying, Stamp duty, First time buyers, Property, Financial news, Borrowing, Secured loans at 12:57 pm by admin
The chancellor has come under fire and been accused of missing an opportunity by not offering to help first time buyers struggling to get onto the property ladder. The reason for the criticism is that the chancellor decided not to the raise the level of stamp duty from its current level of £125,000.
In his pre-budget report the small print does refer to the possibility of reforms that might allow certain people buying their house through official shared equity schemes to escape paying the tax. Typically this would be public sector workers who increasingly find that their salaries are no match to what they could receive had they worked in the private sector.
A report released by the Council of Mortgage Lenders was released just hours before the Chancellor’s pre-budget report and it warned that first time buyers were finding issues of affordability increasingly difficult to deal with. With house prices having outpaced wages over the last decade and interest rates on loans and mortgages rising, first-time buyers are hard pushed to reach that bottom rung.
Many experts were surprised by the fact that the pre-budget report lacked a reference to stamp duty despite the fact that the Conservatives had pledged to remove it for first time buyers that are worth £250,000 or less.
Halifax has found that the average UK first time buyer now pays roughly £169,000 for their first home. On a property of that value they have to dish out an average of £1,688 in stamp duty, on top of the deposit, moving costs and first home loan repayment.
Some experts have argued that the removal of stamp tax for first time buyers was an ideal way of helping the thousands of people out there looking to get onto the first rung of the property ladder.
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