However, it has been a difficult financial year for most people given the credit crisis and the recession, and this has left many people without as much disposable cash as they need to make their purchases for Christmas.

It is therefore likely that many people will have turned to their credit cards to tide them over this festive season, despite warnings that have been issued by the Church of England with regards to using credit cards.

The Church of England made a broadcast several weeks ago called Wishing you and Affordable Christmas, and in it tried to discourage consumers from using their credit cards to spend frivolously at Christmas, as otherwise they would find themselves facing terrible debts once the festive season was over and reality hit home.

The Church of England had stated that by using cash rather than credit cards to pay for Christmas purchases consumers could help themselves to budget more effectively, and could avoid getting into debt over the Christmas period.

The Church also said that it was important to ensure that people had a good Christmas without having to cope with a terrible New Year because of the amount that they had spent on their cards, which they would then have to repay.

However, the British Retail Consortium said that the Church should not make out that those spending on credit cards are doomed, stating: “It is wrong to demonise those who want to borrow. Yes, shoppers should not borrow money they can’t afford to pay back, but credit is an important device to spread the cost of a range of needs and wants, at anytime, including at Christmas.”

Did shoppers heed Church of England warning? is a post from: Glitec Loans

Many banks have now had to be bailed out using taxpayers’ money, but although one might think that there would be some gratitude from the banks for this bailout from the public purse rather than being sympathetic to the needs of consumers, banks seems to be using them to try and recoup their own losses.

There are a number of ways in which the taxpayer has ended up paying for the mistakes that the banking industry has made, and in one way or another most of us will find ourselves suffering in some way whilst the banks do all they can to claw back revenue and shore up their own finances. Some of these are outlined below:

Borrowing

Borrowers have really suffered as a result of the blunders that the banking industry has made.

Whilst banks are being encouraged to stop lending irresponsibly, which is partly what got the industry into the mess that it is in, they are also being encouraged to start lending again the eligible consumers and businesses in order to help the economy to recover.

However, recent reports have shown that in order to shore up their own finances banks are strictly limiting the amount of money that they will lend out on things such as mortgage, and once the allocated funds have been used those that apply for finance afterwards are likely to be turned down even if their credit rating is excellent.

In the past someone with good credit would have no problem getting finance, but these days it seems to depend on the time of day that you apply and whether or not the banks has used its daily allocated funds by then.

Loans and mortgages

Over the past five months the base interest rate has been at an all time low of just 0.5 percent, which is just a tenth of the level that it was at just over a year ago. However, despite this rock bottom base rate the interest rates that lenders seem to be charging on loans and mortgage seems to have no link to the base rate.

One industry official summed it up by stating: ‘Reducing interest rates to these low levels was intended to make borrowing cheaper, to help kick start the economy. Evidence shows that this is just not happening.’

However, the British Banker’s Association states: ‘The cost of borrowing reflects more than the Bank of England base rate. Various factors affect the price of lending. Banks’ costs have gone up, and there is less left to lend. More people default in recessions and banks can take longer to get their money back as they help customers by rescheduling repayments. They are paying relatively more for their money as a result of both competition for savings and scarce and expensive wholesale funding.’

Credit cards

Credit card customers have also been affected by banking blunders. Some cardholders have seen their interest rates rocket, others have seen their credit limits slashed, and some have even seen their accounts cancelled. Getting a credit card has become increasingly difficult even for those with pretty good credit. Also, banks have been increasing various fees on credit cards, such as annual fees, cash transaction fees, foreign fees, and a range of other charges as they see fit.

In addition to this banks have acted cunningly by reducing the minimum required repayment for some cardholders. Although this may seem like it is designed to help consumes in the current climate, what it actually means is that you will spend far longer paying off the credit card debt and pay far more in interest to the lender.

Some of the ways in which banks are getting more money from consumers is a post from: Glitec Loans

Since the onset of the global credit crunch the availability of credit cards has dropped through the floor for many consumers, especially those with low incomes or bad credit, and in the current economic climate many may find themselves having to look elsewhere if they are desperate to get finance.

Industry experts are worried that as credit card and loan availability continued to dwindle during the recession a rising number of Brits will turn to loan sharks for their financial needs, and could then find themselves getting burned as a result of the crippling interest that these sharks demand even for relatively small loans.

Whilst strict regulations and laws have been put into place with regards to loan sharks experts reckon that with the rising number of traditional lenders being more stringent with lending this practice is actually on the increase.

A recent report from the New Local Government Network claimed: “The diminished availability of regulated sub-prime credit is creating conditions where a sizable number of people have little option but to borrow from illegal sources. At least 165,000 people already use loan sharks in the UK and we can expect the number to rise sharply.”

It was also claimed in the report that there are certain areas where consumers are more likely to fall victim to loan sharks, and these areas were Stoke On Trent, Gateshead, and Manchester.

Credit card drought could spell good news for loan sharks is a post from: Glitec Loans

Industry officials say that the dramatic cuts in interest rates has resulted in homeowners pumping more money into repayment on their tracker mortgages, and many have kept repayments as they were even though interest rates have fallen, resulting in them clearing far more of their mortgage debt far more quickly.

It is also though that many people have decided that rather than pay their money into savings accounts, where at present it is earning little to no interest, they will put it towards repaying both secured and unsecured debt, where interest charges are still high. As a result of this there has been a significant impact on the repayment of both mortgages and unsecured debts such as loans, credit cards, and overdrafts.

One industry official said that the majority of people that were paying off their mortgages more quickly were those with tracker deals, who have been the main beneficiaries of the interest rate cuts, which have seen the base rate fall from 5 percent in October to just 0.5 percent by this March. She added that some of these homeowners had seen their mortgage repayments fall by up to 80 percent.

She stated: “In our view this is one important channel in which interest rates are working. Roughly 40% of the mortgages taken out in 2007 were trackers and so will have benefited fully from the decline in Bank Rate over the past 18 months. Because of falling house prices this money is being used to pay down debt rather than spent on goods and services.”

£8 billion of mortgage debt paid off by UK homeowners is a post from: Glitec Loans

As a result many people may find that they have still not managed to sort out their Christmas and New Year debt, and with the recession in full swing and fears over job losses this is something that people need to look at sorting out as quickly as possible.

Whilst last year was a financially turbulent one for many people there was little evidence that people cut back on their spending over the festive season, and officials from one debt charity have estimated that many people ended up spending even more than they thought they might, leaving them facing a real financial hangover for the first few months of this year. Moreover, whilst many people may have run up debts and credit cards this Christmas just gone, the charity states that many of these people had still not finished clearing debts from the previous year, which has resulted in debt being piled on top of debt.

Industry officials are now urging consumers that are still struggling to et their finances in order to be as pro-active as possible and try and reduce or streamline the debt if they cannot get rid of it altogether, particularly given the financial difficulties that many will face in months to come as the recession bites harder, the financial climate become more difficult, and job losses continue to soar. Taking action now and doing something about this debt could mean one less thing to worry about over the course of what is set to be a volatile year for many.

For those that are still in need of a credit card to fund various purchases it is advisable to ditch the high interest credit card and opt for a 0% purchase credit card, where you can enjoy a far longer period of interest free credit on purchases. If you still have an existing balance on your high interest credit card you should look at transferring this to a 0% balance transfer card, which means that you can avoid paying interest on the remainder of the balance providing you repay it in full within the interest free period specified. Measures such as these can help you to save a fortune in interest over the course of the year.

If you have dipped into your overdraft over Christmas and money is a bit tight at the moment it can be all too tempting to keep using your overdraft rather than repaying it. However, this means that you may incur costly charges each month, and if your overdraft is close to its limit you increase the chances of exceeding the overdraft limit, which can mean even higher charges. Even if you cannot clear your overdraft in one go, try repaying a small amount of it each month by making the odd sacrifice so that you clear it over a period of time.

If you seem to have accrued debts all over the place, such as several credit cards, overdraft debt, and even small loans, then it may be worth considering a consolidation loan, which will enable you to repay all of these debts and replace them with just one loan. If you are able to get a good rate on a debt consolidation loan, which should be easier now that the base interest rate has fallen to just 1 percent, then you could also cut your monthly outgoings significantly as well as cutting the number of debts that you have to deal with.

Have you managed to streamline your New Year debt? is a post from: Glitec Loans

Part of dealing with any problem is to actually acknowledge that the problem exists, and therefore you should never try and push financial worries to the back burner, as they can quickly get worse and spiral out of control, which can make it even more difficult to regain control over your financial situation. You will know when your financial commitments become too much, as you will regularly struggling to make ends meet and may even find that you are paying out more than you are bringing in, which means that you are probably relying on credit to fund day to day living and pay bills.

However, relying on credit such as credit cards and loans to fund your bills and payments can be very dangerous, and can quickly lead to unmanageable debt levels. You need to make sure that you are not relying on credit to make up your finances on a regular basis, as things will soon come to a head otherwise. Rather than relying on credit to try and make up your money each month you need to look at a longer term solution that will not lead to spiralling debt, such as cutting back on your outgoings.

There are a number of ways in which you may be able to cut back on your outgoings in order to ease the financial strain. You may find that simply by going through your income and outgoings you can find ways to reduce the amount that you are spending each month, perhaps by simply cutting back on the amount that you are spending on going out, clothes, general spending etc. You may also find that you can reduce your outgoings by switching certain products and providers such as utility suppliers, phone suppliers, insurance company, etc, and by finding cheaper deals you may be able to save a fair amount each month overall.

Consolidation may prove another effective way to cut back on the amount that you are paying out each month, and you can do this in a number of ways. You could, for example consolidate all of your expensive credit cards debts by transferring these balances onto a 0% balance transfer credit card. Alternatively, you could look at taking out a low rate consolidation loan and using it to pay off all of your smaller existing credit, such as store cards, credit cards, overdrafts, smaller loans, catalogues, and more.

Recent additions:

• What’s in store for the UK economy?
• Start of year sees insolvency levels rise
• Credit crunch leads to increase fraud on finance applications
• Lenders need to be more cautious
• CAB still dealing with many debt enquiries

Acknowledge and deal with your debts is a post from: Glitec Loans

Since last summer, when the global credit crunch made its way to the UK, lenders have been increasing stringency when it comes to lending criteria, and have made it far more difficult for consumers to get finance, whether it is a mortgage, loan, credit card, or other type of finance. This has had a profound impact on consumer confidence and has also affected the economy, with consumers unable to afford to spend. Many people, particularly those with past credit problems, have suffered difficulties in getting credit, and those that have may have paid a high price in terms of interest rates.

However, some consumers are of the mind that omitting certain facts from their credit applications, telling a couple of lies, or falsifying information could help them to get the credit that they need, as it will make them look like a lower risk than they actually are. Officials, however, warn that lenders share information about applicants, and if the fraud is discovered then the applicant could be risking their financial future, as lenders will not deal with those found guilty of this type of fraud, which is logged on their credit file.

Industry officials from the UK’s fraud prevention service, Cifas, claim that in the first three months of this year fraud levels in cases such as these rose by 10% compared to the same period last year. Watchdog officials have been calling for increased action to be taken against this type of fraud. An official from Cifas recently stated: “Because people are getting into debt earlier, and because the credit crunch has diminished their access to finance, they are now resorting to fraudulent applications for funds.”

According to data the number of people telling lies on finance applications forms has risen from 19,239 in the first quarter of last year to 21,780 in the first quarter of this year. One of the most common falsifications on applications according to officials is failure to disclose a previous address where the applicant was known to have poor credit. However, whilst many consumers may think that this is the only way to get the credit that they need at a rate of interest that they can afford officials state that it is counter-productive and could make the situation worse in the event that the lies or fraud are discovered.

Recent additions:

• Lenders need to be more cautious
• The credit squeeze continues
• CAB still dealing with many debt enquiries
• Do your finances need to be restructured?
• How Is The Credit Crunch Affecting Building Societies?

Credit crunch leads to increase fraud on finance applications is a post from: Glitec Loans

Many people may not have realised just how deep an impact the credit crunch would have when they first heard about it last August, which is when it made its way across the Atlantic, having been sparked in the sub-prime mortgage sector in the United States. However, over recent months many have learned to their dismay that the credit crunch has had a very real effect on the nation’s finances, and lenders, businesses, and consumers have been affected.

Most people now know only too well how difficult it has become to get any form of credit, including mortgages, loans, credit cards, and other forms of finance. The mortgage markets have been hit particularly hard, and the difficulties that lenders are now facing when it comes to securing funding to finance their mortgage lending has brought the mortgage sector practically to its knees. The number of mortgages that are available has plummeted in the past six months, with an estimated two thousand mortgage products being taken off the shelves in the last month alone.

Mortgage lenders and loan providers have also been making it more difficult for consumers to borrow by hiking up the interest rates on borrowing and tightening up on their lending criteria. This means that many people may find that they are no longer eligible to take out a loan or mortgage, and those that are eligible may end up paying far more for the privilege. The lack in the choice of products means that many people may find that affordability and accessibility is reduced even further.

Other financial sectors that continue to be affected by the global credit crunch include the credit card sector. A recent report suggests that around eighteen thousand credit card applications are being turned down every week in the UK, reflecting the additional caution that lenders are exercising when it comes to who they will lend to and how much they are prepare to lend. Many credit card firms have taken action in order to protect themselves against the risks that have come with the global credit crunch, and some of the steps that have been taken include raising interest rates and charges, reducing credit limits, withdrawing credit facilities from customers that are classed as high risk, and turning down an increasing number of credit card applications.

Loan and mortgage providers have also taken similar steps in terms of increasing stringency when it comes to lending criteria and hiking up rates and borrowing costs despite recent base rate cuts. Even the Bank of England has had to step in to try and increase liquidity in the money markets, ploughing billions of pounds into the money markets and devising a plan that enables mortgage lenders to exchange high quality assets for government bonds.

Recent additions:

• Tap into your home equity
• Taking financial advice about mortgages
• The Benefits Of Unsecured Loans
• Securing A Loan Against Your Home
• Tips to get onto the property ladder

The credit squeeze continues is a post from: Glitec Loans

Most people know how credit cards work, but just in case you’ve been on a secret NASA space flight round Neptune for the last couple of decades we’ll briefly run over what credit cards are.

How credit cards work

Take one of the earliest credit card company’s: Barclaycard. Providing you meet their lending criteria they will give you a credit card and a set amount of credit that you are allowed to use. If this is your first credit card and your credit history is relatively short, then you are likely to get a card with a comparatively small amount of credit available to you. As the months go by and you prove yourself to be a responsible card user Barclaycard will increase that credit limit.

Ways to Use The Credit Card

There are two ways to use a credit card. You can either go into a shop, (or buy goods over the internet), and ask the retailer to deduct the price of those goods off your credit. Or you can go into a bank and draw out cash or transfer funds to your bank account, which is also counted as a cash transaction.

When you purchase goods you get an interest free period, often about 50 days in which if you pay back the full amount of the purchase so you won’t be charged for using the credit facility of your card.

Cash transactions are usually subject to a higher rate of interest than purchases and often the interest starts being charged from the moment the transaction is registered on the card’s account.

Credit Card Statements

On your credit card statement you will get a list of all the transactions you have made during the preceding period since your last statement. This is your opportunity to either pay back all the money you have borrowed or leave some on the account. If you leave some on the account it will be subject to interest. Your credit card statement will show you the rate of interest that is being charged and it will indicate the minimum repayment amount too.

The problem with credit cards is that they are usually one of the most expensive ways to borrow money. Store cards are actually more expensive, but compared to an arranged personal loan, credit cards usually work out costing you far more.

Advantages of Competition

These days all the major financial institutions that offer credit cards are being so competitive amongst themselves that you can get some very good deals and if you know what you are doing and are very self-disciplined you can even make this current spate of low interest and interest free offers work in your favour. But that is not for everyone.

Card Swapping

Some people try to beat the system by using one credit card to pay off the outstanding balance they have on another card. And although it might feel as though you’re winning, you’re actually only cheating yourself, because if you are clearing the balance with one card by using the other we have to assume that you can’t actually afford to clear the balance properly with your own funds. So month after month you are going to be stuck in this position, transferring balances and making little difference to the actual amount of debt that you have.

• Quick Balance Transfer Guide
  Balance transfers allow card holders to transfer the money they owe to their existing credit card to another, usually at a special rate of interest. The new credit card company pays off the old credit card debt and transfers it to the new card. This article will tell you how to play the game.

“Danger, Will Robinson!”

Using a credit card to tide you over a difficult financial period in your life or to achieve that holiday you have been promising yourself for years is a huge temptation. Or maybe you have a business venture that you feel is about to break through and you just need a couple of months income to allow it to take off; no matter what it is, if you use your credit card, although it will be simple to get the money because you don’t have to ask anybody for it or fill in any forms, remember, it wont be as simple to pay it back. Debt is a nasty and powerful monster that can easily overpower you.

So, that is our brief guide to credit cards and if you have read this far, welcome back from Neptune.

More Information:

• Visa
• Mastercard
• Card Watch

Credit Cards – An Expensive Loan is a post from: Glitec Loans

To get an understanding of the consequences that may arise from being unable to repay a consolidation loan, it is important to look at how the loans work and what they do. Debt consolidation loans are used by people who already have a fairly high amount of outstanding debt.

This debt will be predominantly be composed of short term, high interest borrowing such as credit cards, store cards, overdrafts and other similar types of borrowing. These types of debts are among the most expensive on the market, with interest rates currently exceeding 25-30 per cent. This is an incredibly high price to pay for any kind of debt. However, they also have advantages. They are incredibly flexible, which means you can borrow as much or as little as you like, so long as you remain within your credit limit. You can also repay this debt as and when you like. Finally, these debts are generally unsecured which means they are not attached to any of your assets such as your home.

Debt consolidation loans will be far cheaper forms of borrowing, with interest rates often as low as 5 or 6 percent. So if you have a couple of thousand in outstanding loans, a debt consolidation loan can save you hundreds every month in interest charges, and may be the only feasible way of ever repaying the debt and clearing your balance. They will also be attractive because you can reduce all your outgoings into one, convenient monthly repayment which makes managing your finances and making repayments on time a far easier job. However, debt consolidation loans do lack the flexibility of these other forms of debt such as credit card balances. You cannot vary the amount you borrow as and when you like. The loan will be a fixed loan, for example, you can borrow £5,000, over 5 years at 7%. You cannot increase this to £6000 or pay it off earlier without calling the lender and specifically arranging to do this. And then, it may not be possible, or you may have to pay extra fees to do so. Therefore, debt consolidation loans do lack some of the advantages of the more expensive, more flexible forms of debt consolidation.

There is another major disadvantage of debt consolidation loans. You may have noticed in advertisements from debt consolidation lenders that they are only available to home owners. This is because the loan will be secured over your home. What this means is that if you fail to make the repayments, the lender can directly get the amount the lent you back by calling up your home, selling it, and taking what they are owed from the proceeds. This is a very serious consequence of failing to meet your repayments and the reason why you should consider very carefully whenever you are taking out any kind of secured loan.

Generally speaking, you will only have your mortgage secured over your home, which means if you fall behind on your repayments, the mortgage lender can sell your house to get the money they are owed. However, if you secure another loan, such as a debt consolidation loan over your home, then the same procedure can be used if you fall behind on these repayments.

If you think there is any chance that you will be unable to keep up with the repayments of the debt consolidation loan, then the best advice is not to take it out. It is putting a high risk on your home, and especially if you have children or other family obligations, this is a risk that you probably cannot afford to take.

However, there is another issue to consider in this regard. While credit cards and other short term debts may not be secured over your home, this does not mean that your home is entirely safe if you fail to keep up with all your repayments. While the process is slower and less convenient for the lender, it is the case that your home will be at risk with any debts that you cannot keep up with. This is because at the end of the day, if you cannot repay them, the lenders can go through the process of taking you to court and having you declared bankrupt, which will clear you of the debts, but you will lose your home and all other assets in the meantime.

Therefore, if you think you can meet the terms of a debt consolidation loan, and it will enable you to keep up with all your payments and commitments, then, after careful consideration, you may well decide that it is still the best way to go in your circumstances.

More Information:

• Managing your debts – It is easy for debt to get out of control. Student loans, losing your job, becoming ill or any number of other unforeseen events can easily cause debts to mount up.
• Consolidating Debts with a Loan – If it seems advertisements for debt consolidation loans are everywhere, it is because consolidated loans are big business. The primary reason for people taking out personal loans over the next year will be for debt consolidation.
• Debt consolidation under OFT spotlight
• Knee Deep In Debt – US government advice on debt consolidation

What Happens if I Can’t Pay the Debt Consolidation Loan? is a post from: Glitec Loans