Archive for January, 2011

Debt advice system needs to be streamlined

Monday, January 31st, 2011

It has been suggested in a recent report that the debt advice system in the UK needs to be streamlined or order to make it more effective for those in need of such services. The suggestion comes as consumers gear themselves up for another financially challenging year, with the soaring cost of living, the VAT hike, government cuts, and potential job losses leaving many households in the financial edge.

If the year turns out to be as challenging as many have predicted it will be there could be further sharp increases in demand for debt related advice, as more and more people realise that they cannot keep up with their financial commitments in the difficult climate. The suggestion has come from the British Banker’s Association, which said that streamlining this sector could provide consumers with greater benefits.

The BBA said that consumers need to be given a better understanding of the system, and debt advice firms should be able to offer assistance to those struggling with debt at an earlier stage. Struggling consumers should also be given a wider range of options according to the BBA, as well as being offered clearer advice on what is available to them and how it can help. Officials from the BBA expressed concern over the confusion in the sector at present, with both formal and informal solutions being offered to consumers, and with some firms charging for advice and others offering it for free.

One of the people involved in the report said: “Our vision is to provide a clear and coherent process to help people facing debt difficulties, to intervene early where possible and to provide a simple debt resolution solution if those early attempts do not succeed. We want to unravel the red tape to bring about a more financially responsible solution for customers.”

Tags: realise, red tape, debt resolution, VAT hike, better understanding, cost, job losses

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Officials urge consumers to make use of their credit files

Friday, January 28th, 2011

The financial sector and climate in the UK is still extremely fragile, and for the millions of people hoping to get a loan or credit card things have become increasingly difficult. Research has recently been carried out into the level of rejection that consumers are experiencing when it comes to getting finance such as credit cards and loans.

The research was carried out by moneysupermarket.com and showed that over the past year over 25 percent of applicants in the UK had been turned down for a loan or credit card, which equates to around 4.5 million consumers. Officials are concerned that this could result in millions of people causing further damage to what may be their already damaged credit files, and this could further reduce their chances of getting affordable finance in the future.

Consumers are being advised to familiarise themselves with their credit file prior to applying for any form of credit, as the state of the credit file and history is one of the things that lenders will look at when deciding whether to grant a loan or credit card. This is why it is important for all consumers to make sure that their credit file is in a decent state before applying for credit.

An official from Moneysupermarket.com said: “The decision to borrow should never be taken lightly, but credit cards still have a huge role to play in the nation’s finances if used correctly. However, it’s worrying to see such a huge number of people being rejected for credit cards or loans, especially as you could avoid being declined by taking the time to research the best card for their needs. Rejected applications can have a damaging affect on your credit score and further reduce the chances of you qualifying for another credit product in the future.”

Tags: credit, fragile, credit score, best card, credit files, damage, time

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Store card finance dropped in November but loans increased

Wednesday, January 26th, 2011

Figures have shown that the level of borrowing on store cards fell in November last year, despite the fact that it was the run up to Christmas when many people traditionally take out finance in order to fund their Christmas purchases. In the weeks leading up to Christmas the level of store card spending tends to soar, as cash strapped consumers look at alternative ways of funding their Christmas purchases.

However, as most people know it can be extremely expensive to use store cards to make purchases unless they are paid off in full within the interest free period. With the ongoing challenging financial climate, worries about job losses, sharp increases in the cost of living, and a freeze on pay, it seems that many people wanted to avoid the high interest debt that can come with store cards.

The data was released by the Finance and Leasing Association, and showed that there was a drop on 25 percent year on year with store card borrowing in November compared to the previous November. The data also showed that there had been a drop in the level of store finance that was being taken out by consumers in November, with this type of borrowing falling by 11 percent year on year in November.

However, whilst consumers appeared to be getting savvier in terms of costly High Street borrowing it seems that more people were keen to borrow using personal loans during the month of November. The FLA figures showed that personal loan borrowing for the month increased by 34 percent year on year, indicating that consumers were still turning to finance in the run up to Christmas but were going for more affordable personal loans rather than high interest store cards and finance.

Tags: christmas purchases, previous november, challenging financial climate, FLA, store, ongoing, spending

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Many consumers still facing huge debt levels

Wednesday, January 26th, 2011

Figures from the Bank of England have indicated that many people in the UK are still struggling with huge debt levels, with a lot of the debt having been accrued some time ago. The central bank has suggested that consumers had started to tighten their belts even before the VAT increase came into play at the start of this year. However, many still face huge levels of debt this year according to the report.

Many consumers are still paying off debt that was accrued last Christmas according to the data in the report. Figures have shown that over recent months consumers have been paying back debt rather than accruing it, and the VAT increase has resulted in more people tightening their belts so that they do not fall into further financial difficulties.

However, there are many factors that are out of the control of consumers, such as inflation levels, the VAT increase, job losses, and spending cuts, all of which could have a severe negative impact on the state of household finances. This means that even with the best of intentions many people could be set to face another difficult year with high debt levels to deal with.

Whilst personal insolvencies are said to have fallen officials are concerned that the level of insolvencies is still high. Many are calling for increased assistance for consumers to learn how to manage their money better.

One official from the insolvency service said: “Although personal insolvency levels are no longer rising, they remain stubbornly high, reflecting the high levels of personal debt that persist across the country. Prevention is much better than cure as far as personal finances are concerned. Review your personal finances frequently and make sure you are not taking on debt you can’t afford to repay.”

Tags: increase, start, VAT increase, prevention, Business Finance, control, official

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Is debt getting you down?

Tuesday, January 25th, 2011

High personal debt levels have been a worry in the UK for many years, but over the past couple of years this is a problem that has increased. The global financial crisis and the recession have left many people in a very difficult position in terms of their finances, with many struggling to make ends meet after going through a few very challenging years.

A recent report from the Bank of England has warned that many people will face yet another year of financial difficulties and debt problems this year, and this is due to a number of factors. Many people are still paying off debt from Christmas, and many are still paying debt that has been accrued over a number of years. On top of this there is the VAT increase that consumers have to deal with, which has resulted in the cost of many items rising.

Sky high petrol prices are adding to the financial misery that many people are facing, as is the soaring cost of living in terms of food and energy prices. A final nail in the coffin is rising unemployment, with public spending cuts and other factors likely to send unemployment levels soaring. All of this will put a huge strain on finances for many people, leaving many on the financial edge.

It is little wonder that so many people are getting more and more worried about their finances, and those in debt will be particularly concerned because of the difficulties that they face when it comes to repayment. If you are one of the people who has been severely affected in terms of their finances by situations that are out of your control then you should look at seeking advice and assistance as early as possible so that you are able to address the issue before it spirals out of control.

There are many debt advice charities and agencies that will be happy to provide you with valuable advice and assistance with regards to your finances. It is always worth talking to one of these agencies if you are concerned about your debt levels, as they could provide you with help that could make a big difference. They can also help you to get a better grasp of managing your finances, so that you are in a position to handle the forthcoming problems such as soaring prices on goods and services.

Tags: coffin, year, public spending, European Union, nail in the coffin

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Avoiding credit card debt could cost you

Tuesday, January 25th, 2011

In the current climate, and given the financial difficulties that most people are facing, it is not surprising that so many people have strong concerns about their credit card debt. Many people have racked up huge amounts of credit card debt over the past couple of years, with many even using their cards to make payments on their rent, mortgages, and bills.

However, although the level of concern over the huge amount of credit card debt that many people are in has increased it seems that many credit card providers are determined to encourage cardholders to get into increasing levels of debt on their cards. This is because some providers are now charging people that do not clock up debt on their credit cards by charging what is effectively an inactivity fee – a fee that is charged for failure to use the card.

It is likely that a rising number of credit card providers will now start charging these fees given the new regulations that have been brought in to provide consumers with a fairer deal when it comes to their credit card debt. These new regulations will mean that credit card companies suffer losses, and many people guessed that providers would try and find new ways to recoup the cash, such as by increasing interest rates and applying fees such as these.

One industry official said: “Consumers that use their cards and cannot repay the balance in full often get charged very high rates on interest on their borrowing. On the other hand, those that are trying to keep their heads above water by not using their cards and avoiding debt may now be charged. It seems as though you just can’t win when it comes to some credit card providers. For people that only want a credit card for emergencies this could be a big problem, as they will have to either use the card, emergency or not, or face paying a fee.”

Tags: couple, official, balance, Balance transfer, inactivity fee, credit, cardholders

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Could you cope with the interest rate increase?

Monday, January 17th, 2011

For nearly two years many homeowners on variable rate mortgages have revelled in the fact that the base interest rate has fallen to an all time low, having dropped to just 0.5 percent in the first quarter of 2008. The drop in the base rate meant that many people saw their monthly repayments plunge, leaving them with more disposable income and enabling them to dodge the risk of losing their property through being unable to meet their repayments.

Over the past couple of years people have used the extra money that they have saved on their repayments for a variety of things, from bumping up their savings or paying off debts and mortgage balances to treating themselves to some luxuries. However, nobody knows how long this low rate of interest will last, and some are speculating that it could come to an end in the near future, with many predicting that interest rates will increase this year.

This leaves consumers in a difficult position. On one hand they the interest rate could stay at this record low for some time to come, enabling the average homeowners to enjoy having more money and make plans for using the money to maximum effect. On the other hand the fact that interest rates could suddenly increase means that consumers have to be prepared and need to ensure that they will be able to afford the repayments.

The problem comes for those with fairly hefty mortgages, as even a relatively small increase in interest rates could make a difference of hundreds of pounds a month, which many may find difficult to get their hands on. This could quickly lead to missed repayments, and ultimately to repossession.

One solution for homeowners who do not feel that they would be able to cope with an interest rate increase would be do look at switching to a fixed rate mortgages, where the interest rate and repayments would remain fixed for a specified period of time, enabling homeowners to enjoy increased peace of mind and stability with their finances. However, this does mean that as long as the base rate stays at this low you will usually be paying more than those on variable rate mortgages.

With an interest rate increase likely over the coming months, based on predictions from industry experts, it is well worth thinking about whether you could cope with a rate rise should it take place, and if not look at the various options open to you.

Tags: increase, maximum, fact, peace, interest rates, Picture Ratings, hefty mortgages

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More students spend more time working

Monday, January 17th, 2011

A student’s life is meant to be all about learning, studying, moving up the educational scale, and even the odd bit of partying and travelling thrown in for good measure. However, these days more and more students seem to be joining the ‘real world’ by spending an increasing amount of time in paid employment whilst they are at college or university.

A study was recently carried out by the NUS and Endsleigh Insurance, and the information was compiled into a report called the Student Lifestyle Report. The information in the report looked at different areas of student life in order to analyse student lifestyles, and looked at areas such as debt, employment, education, and options whilst at university.

According to the analysis more and more students are now spending time in paid employment, and this is partly to cover their financial commitments and debts whilst they are at university. According to the research students worked an average of thirteen hours a week in 2008, but in 2010 this went up to an average of fifteen hours per week in paid employment.

The report also found that a rising number of students were working in paid employment during their holidays, when they were supposed to be spending time resting and studying for exams.

One official involved in the research said: “University offers a unique opportunity for students to grow and develop responsibilities, both academically and financially. It is perfectly healthy for students to seek paid employment whilst at university and in the holidays, particularly if this relieves financial pressure on living costs. However, it is equally important to make sure that students leave enough time to devote to their academic course in order to ensure they get the best possible qualifications.”

Tags: insurance, educational scale, whilst, life, university, Business Finance, different areas

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Avoid further debt this year

Wednesday, January 12th, 2011

Over the past year or two many people have fallen into debt, with many accruing higher debt levels through no real fault of their own. In the past we used to borrow on loans and credit cards to pay for luxuries such as new cars and holidays. However, over the past couple of years this has changed, and people have started to take out loans and use credit cards to pay for every day purchases and essentials rather than just for luxuries and one off purchases.

The higher cost of living compared with the lack of increase in salaries means that people are now finding it more and more difficult to cope financially and make ends meet. Petrol and food prices have soared, the cost of vehicle insurance has rocketed, and many other basic living costs have risen, but wages have only increased slightly, been frozen, and for some people have even fallen.

The temptation to start relying on loans, credit cards, and other form of unsecured credit has increased amongst those that are struggling to afford the things that they used to be able to afford. This has led to more and more people turning to finance and credit for things that they normally wouldn’t have put on credit, and is of course contributing to an increased level of debts amongst households.

In fact, a recent survey was carried out by Scottish Provident showing that these days Brits have to be over £15,000 in debt in order to start worrying about their debt levels. Furthermore the survey showed that around 11 percent of people that were in debt and were struggling to pay bills and keep up with financial commitments would still be prepared to turn to finance and take out another loan.

With the new year only just starting now is a good time for those with debt to try and avoid getting into any more debt, and instead look at ways of addressing the situation so that they are not paying out more than they can afford each month, and can pay for essentials without having to turn to additional credit. This could means going to a debt advice expert or charity for help in budgeting more effectively, or could mean consolidating existing debt with a cheaper, lower rate consolidation loan, so that you do not owe any more money than you already do but can reduce the amount that you are paying out each month through lower rates and longer repayment periods.

Tags: budgeting, unsecured credit, form, loans, new cars

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Worrying trends shown with personal debt in UK

Wednesday, January 12th, 2011

A recent survey has shown that there are worrying trends when it comes to personal debt amongst consumers in the UK. The survey was commissioned by Scottish Provident, and seemed to indicate that consumers have a surprisingly high threshold when it comes to how much debt they will build up before they start to get worried about their debt levels.

The study results showed that it takes nearly £16,000 worth of debt for the average Brit to start worrying about their debt levels. Scottish Provident said that the results of the study are worrying because they indicate that consumers till have a fairly lax attitude when it comes to their debts, despite the difficult financial climate and the continued fragile economy, not to mention concerns about jobs.

For the average Brit the amount that they would have to have in personal debt would be £15,837 before they started to worry about their debt levels. However, for younger people this figure was even higher, coming in at £16,646. The total amount owed in personal unsecured debt on 5th January 2011, according to figures from the Bank of England, came in at £215,834,000.

An official from Scottish Provident said: “With the UK’s national debt figure dominating the headlines, it appears this could have had an adverse affect on how the nation views their own personal finances. To not believe they would be in serious financial difficulty before they reached debt levels of over £15,837 is a worry, and it underlines how debt has become too readily accepted in the UK. What starts out as a small level of personal debt can quickly spiral out of control, so Britons should ensure they keep on top of their personal spending.”

Tags: top, official, high threshold, personal finances, control, Provident, personal debt

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Brits regret not paying off more debt last year

Monday, January 10th, 2011

A recent survey was carried out the results of which showed that many Brits were regretting not paying off more of their debt last year. According to the survey, which was carried out by Internet banking giant First Direct, which is part of the HSBC group, around 53 percent of those polled as part of the survey said that their biggest financial regret of 2010 was not paying off more of their debt earlier.

The survey involved polling around one thousand adults in the UK, and 82 percent of them said that the area of their finances that they were most concerned and unhappy about last year was their loans and credit cards. There are fears that whilst debt has become a major problem for many people over the past couple of years the situation could get worse as a result of government cutbacks and further job losses, which are due to take place this year.

Many people may have made New Year’s resolutions this year to get their debts sorted out, and for those people it is important to take action as soon as possible rather than putting things off again as they may have done last year. Consumers can look at consolidation of their various debts with a low cost consolidation loan, particularly given that loans of £7500-£15000 are said to have come down in terms of interest rates as a price war breaks out amongst lenders.

One official said: “The New Year is the ideal time to reflect on your financial habits and change these for the better. The earlier people start to plan their finances and look to the future, the easier they will find their long term financial position.”

Tags: whilst, loan, GBP, situation, couple, financial habits, United Kingdom

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Steps to Secure a Personal Loan

Monday, January 10th, 2011

Before getting a personal loan there are some steps that will help the process go smooth and easy if the borrower is prepared. It is possible even with less than perfect credit to secure a loan for education, a wedding, holiday plans or to consolidate debts.

The steps that will prepare you to shop for a loan and be approved are:

• Check your credit score, this way you know what type of personal loan to look for and you also will not be uninformed when the lender checks your credit score. This is important, because a credit score will determine what interest rate lenders will attach to the loan. The better the credit score, the lower the amount of interest that will be charged to the loan.

• It is important to know about any extra charges and fees; these can add an additional cost over top of the monthly payment that interest has already been added too.

• The borrower will need to determine what their capacity is for repayment; prior to taking a loan and also to determine what length of time it will take to comfortably repay the monthly notes.

• Consider using payment protection insurance, this can help to cover the loan payments if health or other issues prevent you from paying the amount. This is a safety precaution that for the unsecured personal loan will avoid bad credit and legal issues. For the secured loan the lender can repossess the property used to secure the loan, cause bad credit and other legal issues.

These are simple steps that help the borrower be more prepared when taking a loan and can keep people from making snap decisions about taking a loan they are not prepared for and could ruin their credit. Taking a personal loan is usually in a smaller amount, rather than to purchase a home, which means in some cases if you are not prepared financially to pay it back and it is for a holiday it might not be a good idea. If you have secure employment, a good credit score and have the need to take a loan, after finding the right lender there is no reason not to obtain a loan.

There are some other important facts about taking a personal loan:

• Do not jump at the first lender, check all the lenders out, with the Internet this can be done easily to see what their rates of interest are, what their repayment options are and what their extra costs and fees are.

• Determine if it makes better sense to attempt to obtain a loan that is unsecured or one that is secured. This decision should not be taken lightly and can also depend on the borrower’s credit score. Having a poor credit score and using property to secure the loan amount will help to get the loan approved. The one caution that will need to be taken is to make sure you are able to repay the loan and not loose the property that was used to secure the loan amount.

Tags: borrower, repayment, Determine, rate lenders, need

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Expert wants free debt advice for all

Saturday, January 8th, 2011

Getting debt advice has become more and more difficult of late, and for the past couple of years the demand for such surfaces has become huge as an increasing number of people have found themselves struggling with their finances. For many this has meant that they can no longer make ends meet in terms of their finances, and it has become necessary for them to seek advice to try and get their debts and finances sorted.

However, because of the number of people that are currently trying to get advice from debt charities and the like the waiting times for appointments to see a debt expert have rocketed. This has resulted in people having to wait for huge lengths of time to get the advice that they need, and for this reason many may end up going to a debt advice counsellor that charges.

One industry expert has now said that it should be everyone’s right to be able to access timely free debt advice rather than having to pay, adding that this advice should be extended to those that have overspent on their savings as well as those that are struggling with debts such as credit cards, loans, and other types of debt. She expressed concern that many people were not getting access to debt advice for free, and for some people this could mean that they are not able to get the advice that they need and their debt problems could end up getting worse.

Personal debt levels have been rocketing since the onset of the global financial crisis, and many people have discovered that their finances are severely overstretched. This said, The Insolvency Service has said that the number of personal insolvencies has started to fall, although the number of pensioners that are becoming bankrupt has been rising according to the figures.

Tags: reason, industry, loans, past couple, Personal debt levels, Human Interest, timely free debt

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