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Thu 28th Aug, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, mortgages, Remortgaging, Consumer debt, Homeowners, Financial products, Property, Unsecured loans, Financial news, Housing news, Borrowing, Secured loans, Debt management, Missed payments, House repossession at 12:29 pm by admin
An increasing number of households owned on bad credit mortgages are facing repossession as they make late loan repayments.
According to figures out from Standard & Poor, nearly a quarter of all bad credit home loans are now in arrears - many by as much as 90 days. This is up from 22% in the last quarter surveyed and now officially at a record level.
Comparison website Moneysupermarket have commented that this situation is of course attributable to the credit crunch, as nearly all homeowners have been faced with increased interest rates. For families who were already on a higher than average rate, a price rise can make it impossible for repayments to be met.
Additionally, the tighter lender criteria now in place across the loans market has made it nearly impossible for families to find cheap loans when a fixed rate deal comes to an end.
With fewer loan products on the market and many lenders pulling out of the sub-prime loans market, borrowers are having real difficulty in finding a bad credit loan at a price they can afford.
With reports on an increasing number of repossessions taking place and uncertainty in the jobs market, UK debt charties are bracing themselves for floods of enquiries. As colder weather sets in and fuel requirements rise, more families are likely to be plunged into the cyle of bad debt.
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Tue 15th Jul, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, Homeowner Loans, UK Finance, Credit Card, Consumer debt, IVAs, Unsecured loans, Financial news, Borrowing, Insolvency, Personal debt, Secured loans, Bankruptcy, Debt management, Missed payments at 12:44 pm by admin
The high levels of debt that Britons have built up over the past few years are finally coming back to haunt many households. The impact of the credit crunch is starting to take its toll on borrowers according to experts and it is expected that things are going to get much worse as the year progresses.
The accountancy firm KPMG has said that it is predicting that over 130,000 people are going to be declared bankrupt or enter into individual voluntary arrangements with their lenders. This will be up from the 109,615 who did the same last year.
When people enter into individual voluntary arrangements (IVA) they are allowed to restructure debts such as personal loans, credit cards and hire purchase so that their debts can become more manageable. Monthly repayments are made for a fixed period of time with the remainder of the debt being written off at the end of the period.
It is estimated that as many as 2,500 people have debt in excess of £100,000. In 2007 the average amount owed by individuals entering into IVAs was £50,300.
KPMG found that the average repayment for a loan on an IVA was 38% of debt. The average debtor repaid £19,000 of their debt and as a result £1.3bn had to be written off by creditors.
The high average level of debt indicates just how bad lending has been in the past few years. Most debtors owe so much that they have no realistic way of actually repaying their debt.
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Mon 16th Jun, 2008
Posted in Consumer Credit, Personal loans, Debt Consolidation, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Debt management at 1:21 pm by admin
There are mounting fears that the Bank of England is losing its grip on the economy. A combination of rising food costs, fuel hikes and other price rises are stoking inflation which should mean raising interest rates for the Bank.
However as a result of the global credit crunch, banks are starting to hoard money instead of lending which is putting downward pressure on house prices and pushing the monetary policy committee (MPC) towards actually cutting the base rate. Even in this atmosphere of falling house prices, would-be buyers are finding it hard to secure a home loan to make a purchase they can now afford.
The credit squeeze has created much uncertainty in the economy and the nine MPC members seem very reluctant to actually cut interest rates. The members are facing a dilemma in that domestic inflation is heading in one direction while at the same time the international money market is actually going in the opposite direction.
When the Consumer Prices Index went up by 2.1% - which is above the government target of 2% - it would, under any other circumstances, signal an increase in interest rates in order to bring about higher borrowing costs. The interest rate at 5% is still an expansionary rate which will only fuel higher inflation, putting inflation up again to a more neutral level will hopefully neither dampen nor stoke the economy.
However the credit crunch is pulling for interest rates to come down. Uncertainty in the banking sector has prompted banks to cut lending to other institutions and instead hoard cash. Customers are reporting difficulty in securing personal loans, especially for debt consolidation, as lenders are either unable to access the funds, or simply unwilling.
Bank of England governor Mervyn King has warned the MPC that the credit crunch could get even worse in the coming year unless interest rates are cut.
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Wed 16th Apr, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Balance transfer, Financial news, Borrowing, Personal debt, Secured loans, Debt management at 1:36 pm by admin
It has been revealed that credit card companies have introduced an astonishing 31 different fee rises recently, a move that could end up costing consumers millions of pounds collectively.
The changes were revealed by Moneyfacts which showed that there had been large rises in fees charged for withdrawing money from cash machines as well as rises in cash interest rates. It has also been revealed that Banks and Building Societies have also increased the commission charged for foreign use as well as increasing balance transfer fees.
Alliance & Leicester implemented the largest cash fee rise, upping its rate from 2.25% to 3%. This means that withdrawing £250 with your credit card will now cost £7.50. Other banks have also upped their charges with the AA, Bank of Scotland, Halifax and Intelligent Finance all putting up their rates from 2.5% to 3%. Nationwide, Smile, and Yorkshire Building Society also increased fees from 2% to 2.5%.
Smile has increased its cash rate by the greatest amount, pushing up the interest rate for cash withdrawals on its Gold Visa from 14.9% to 23.9%. The problem with withdrawing cash using your credit card is that it is very expensive, first of all you incur a fee and then there is no interest free period. So it is best to avoid taking money out using your credit card at all costs. Comparisons with overdrafts and personal loans, show that borrowing money in this way has always been extremely expensive.
Balance transfer fees have also gone up with Alliance and Leicester increasing its balance transfer fee from 2.25% to 3%.
These new fee and rate rises plus the credit crunch are behind a massive customer move away from credit cards towards debt consolidation loans. Many borrowers are finding it necessary to tighten their financial belts, and this includes clearing old card balances and cutting up cards.
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Wed 2nd Apr, 2008
Posted in Bad Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Credit record, Balance transfer, Unsecured loans, Borrowing, Personal debt, Debt management, Zero percent cards, Missed payments at 12:54 pm by admin
If you are considering switching from your current credit card provider to a new one because you are having trouble paying back your balance then it would be helpful if you were aware of a few pointers first.
Many credit card companies offer very low interest rates on balance transfers; sometime this can be as low as zero percent. But there is a time limit on this balance transfer. So for example if you need six months to pay off your debt and the zero percent interest on balance transfers apply for the first six months then this is an option worth considering. This could possible save you from having to pay back possibly hundreds in interest fees.
Make sure you read the fine print on the deal before signing and take care to make all repayments on time. Missing a payment or paying late can result in the lender replacing your great rate with a much higher APR, leaving your paying more than if you had taken out a debt consolidation loan to clear the original debt.
Another danger is if you do fail to pay back the balance within the given time period the zero percent will revert back to the a much higher rate on the card and sometimes this includes the lender back-charging interest on the first six months of the loan as well. This could result in repayments outweighing the benefit of the zero interest on the first six months.
Lenders do have a responsibility to warn you if the introductory offer of zero percent is about to run out. However as a general rule its better not to trust to this reminder jogging your memory, as it can often be buried in small print. Just make sure you yourself are always aware of the time limit on your offer or one morning you could wake up to a big surprise.
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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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Thu 21st Feb, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, interest rates, Consumer debt, Financial products, Balance transfer, Unsecured loans, Financial news, Borrowing, Personal debt, Secured loans, Debt management at 11:38 am by admin
For most of us, taking out a large personal loan with which to consolidate all our existing debt is a bad idea since most of us will typically end up owing more than we did in the first place according to recent research.
As there are now more and more people defaulting on their loans banks are increasingly feeling the pressure so don’t be surprised to see banks tightening up one their lending criteria as well as pushing rates on personal loan rates higher and higher. For instance the lowest personal loan today is close to 6.9% while just one year ago it was more like 5.9%.
More and more people believe they will never be debt free and over 8 million people who take out loans to consolidate debt will find that they actually owe more after 5 years than they did, according to research from moneysupermarket.com.
The study showed that 12.7 million Britons had taken out loans to consolidate some or all of their existing debt. However 8.4 million of those people continue to build up more and more debt.
A third of people who have taken out debt consolidation loans now feel that they are trapped by debt and that their debt is actually spiralling out of control. Only 13% of people who have to loans feel that it was a positive decision.
If you are thinking of taking out a personal loan make sure you shop around to find the right deal for you.
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Wed 16th Jan, 2008
Posted in Consumer Credit, Debt Consolidation, UK Finance, Credit Card, interest rates, Financial products, Balance transfer, Financial news, Borrowing, Bank charges, Debt management, Zero percent cards at 12:16 pm by admin
According to a report from MoneyExpert.com, banks made more than £239 million in transfer fees from credit cards offering zero percent interest rates in Britain in the last year.
Many customers choose a zero percent interest rate credit card to help manage their finances, however many credit card companies are charging customers transfer fees of up to three percent of the balance. If someone with a £5,000 debt is charged 3% they will then have to pay a fee of £150. The Office of Fair Trading is considering looking into these fees.
Many consumers who want to save money on their interest payments and manage their debts have used a zero percent balance transfer deal. Almost all credit card providers who offer zero percent balance transfers now charge a handling fee anywhere from two percent to three percent of the balance being transferred. The balance transfer handling fee became widespread after banks and building societies were hit last year by the Office of Fair Trading on charging penalty fees, so the banks then sought another source of income, which has come to be the transfer fees on zero percent balance transfer cards. According to the report almost 12 million people have switched credit cards over the past year with an average fee of £19.99.
Balance transfer credit cards are ideal for those who have large sums that they want to pay off and avoid paying interest on. However, as you are searching for a credit card with a zero percent balance transfer you will want to compare the handling fees that the credit card provider will charge as some will only charge a flat rate, while other will charge a percent of the amount being transferred.
Bear in mind too how long you realistically expect to take to pay off the debt. You may know that the 0% period only offers you a break from paying interest and that you cannot clear the outstanding sum in that time. If so, you will want to calculate how much interest you will be paying once the period is over. It may cost you less money and hassle to arrange a debt consolidation loan. Although a loan will attract interest from day one, at least you are committed to a set period to repay at a rate that won’t change.
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Wed 21st Nov, 2007
Posted in Bad Credit, Consumer Credit, Personal loans, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Student debt, Unsecured loans, Borrowing, Personal debt, Debt management, Budgeting at 1:52 pm by admin
One of the most expensive times of year for the parents of teens is August. Back to School means arguments about the difference between a good outfit, and an in-style outfit. The difference can be £500.
Adding books, tuitions, bus passes, sports, after school events and social outings can cost more than one month’s income. Few people have enough money to cover a student’s entire list of wants and needs. This problem is compounded when a family is trying to send two or three teenagers to school at the same time.
Many students earn their own money to help cover school costs. But parents need to be aware that others apply for credit cards as a form of unsecured loan without their parent’s knowledge.
Banks actively recruit students. Many students believe this is free money, a perk. They run up the limit, and then accumulate interest for months, before parents learn of the debt.
A student can easily run up an unsecured debt of £5,000 in a matter of weeks. This debt can haunt parents for years, and ruin a student’s consumer credit information report. Parents need to inform their children about the responsibilities and risks of a credit card, before the students are forced to take out a second mortgage or debt consolidation loans to pay their children’s debt.
Back to school is a great time to teach children that fashion does not define a person. It will not make them popular, but it could put them in debt. There is no reason why a student cannot be taught about APR and interest rates, debt management on mortgages and loans, and of course responsibility.
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Thu 4th Oct, 2007
Posted in Consumer Credit, Debt Consolidation, UK Finance, Credit Card, interest rates, Consumer debt, Financial products, Spending, Borrowing, Personal debt, Debt management at 10:54 am by admin
According to a survey by Nationwide Building Society only 29% of credit card customers are aware of the fact that many credit card providers always pay off debts charged at the lowest interest rate before paying off the debts with the higher rate of interest, making themselves an additional £500 million each year from this credit card interest rip-off. Most credit card companies use this method to reduce the balance owed on your account to suit them, not you - a sneaky way of maximising the interest that you end up paying.
Most people are too optimistic in the sense that many credit card customers trust in their credit card company too much and assume that the company has their best interest at heart, when if fact it only has interest in the amount of money they will be able to make off of their customers’ debt.
Figures from the survey reveal that 18% of people assume that the longest outstanding debt is paid off first, with another 12% believing that the items with the highest interest rate is paid off first. What seems to be the most disturbing is that a large percentage admits to not having a clue as to how their debt is paid off; roughly 26% admit to not knowing how their debt is paid off. However, this could all change as the Department of Trade and Industry has ruled that starting in October 2008 all credit card providers must draw attention to the order in which payments are made. This is part of general trend towards governing bodies keeping an eye on financial services, such as personal loans, insurance, banking and other forms of consumer credit agreements.
Consumers finding themselves paying vast amounts each month from their credit card bills and yet paying little more than the minimum amount would be wisest to consider a debt consolidation loan. Customers usually find that they can continue paying the same each month in loan repayments and yet most of the sum repaid will be capital, not interest, leaving them to clear the debt in record time.
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