Posts Tagged ‘Interest’

Banks to tell consumers to cut back on spending to avoid mortgage debt

Wednesday, August 31st, 2011

It has recently been reported that a number of banks are planning to carry out secret credit checks on mortgage customers and then contact those that they believe are on the verge of falling into mortgage debt to tell them to cut back on their spending in other areas. Whilst the banking industry may view this as a proactive move there are many that will view it as downright intrusive and the plans have now resulted in heated debate over whether this is something that banks should be allowed to do.

According to reports banks are looking to identify which customers are at risk of falling into arrears, particularly if interest rates were to increase, and then contact them by phone to advise them to reduce their spending on things such as mobile phones, television services, internet, going out, and other things that some may consider to be luxuries or non-essentials.

Banks are set to be very blunt about the options that some of those who will be contacted will have available to them – basically, they will be told that they either need to reduce their spending or they could risk losing their home. Homeowners are being warned to focus on their homes and mortgages rather than splashing out on things that they do not need, as those that are already on the verge of problems will most certainly struggle if rates increase from their all time low of 0.5 percent.

One banking official said: “Some people won’t cope when interest rates rise, but for others there are remedies. They need to think about what is their most important debt. It is not their credit card or renewing their Sky subscription, or going out for the latest mobile technology. It is their mortgage. We want customers to look at their finances and change their behaviour.”

Tags: secret credit checks, sky subscription, Interest, Business Finance, mobile phones, latest mobile technology

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Brits should stop saving and pay off debt

Thursday, August 4th, 2011

An industry expert has recently stated that Brits need to make sure that they are not saving money when they have a lot of high interest debts that they need to pay off. There are many people who, although they have high interest debts such as credit cards, store cards, loans, and overdrafts, continue to put any spare cash into their savings accounts rather than using it to repay some more of their debt.

Justin Modray of online resource Candid Money said that in the current financial climate it was important for people that had high interest debts to focus on using their money to repay these debts rather than using it to put to one side. This has become particularly important given that the base interest rate has remained, once again, at an all time low of just 0.5 percent, which means that savers are unlikely to get much if anything by way of returns on their savings.

Modray said that the sensible option for consumers in debt was to make sure that they made payments on their debts and tried to get themselves back on track financially rather than putting money into savings where they would get little in the way of interest whilst paying off debt that came with a shed load of interest added. This way, consumers could get themselves back on track and avoid paying a lot of unnecessary interest.

He said that those who already had savings could use them to repay debt and could put extra money toward making debt repayments without the worry of saving for emergencies.

Modray said: “Those fortunate enough to have savings can use them to stave off debt, but I think for many it’s more a case of just trying not to drown in debt and saving for the future remains a pipedream.”

Tags: home, spare cash, saving money, Interest, savers

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Payday loans described as legalised robbery

Tuesday, July 19th, 2011

Payday loans have been around for a long time but they seem to have become more popular over recent years. With many people struggling to get finance in the post-credit crunch years, more and more people have become aware of the existence of payday loans, not least because many payday lenders are taking advantage of the difficult financial climate and advertising their services more to what has become a desperate audience.

For many people in the current climate it has become impossible to stretch the income far enough, and a huge number of people are left facing a shortfall in their finances when it comes to meeting all of their financial commitments. For this reason more and more people end up turning to payday loans, which are short term loans that are designed to tide the borrower over until payday comes along.

However, the interest charges on these short term loans can be phenomenal and many people have ended up paying a fortune because they have let the loan rollover into the next month, which results in the fees being applied again. One industry expert said that people had become so desperate for money to tide them over until the end of the month that they had started turning a blind eye to the problems and costs involved in this sort of loan.

He said that the costs of borrowing in this way were potentially horrific but that people were still going ahead and using these loans to get them out of a financial pickle.

He stated: “Typical payday loans charge interest of around 2,000 per cent or more. This is nothing short of legalised robbery.”

The comments came after separate research revealed that a rising number of people were finding that they were running out of cash part way through the month.

Tags: Interest, advertising, business, expert, number, robbery, payday

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Many being chased for loans they did not take out

Thursday, October 28th, 2010

It has been revealed in a recent report that thousands of Brits are being chased for loans that they never took out in the first place. The reports claim that at least five thousand people in the UK are being chased by debt collectors who are working on behalf of a payday loan firm. However, they are being pursued for money that they never borrowed according to officials.

It is thought by police authorities that this is linked to identity theft, and that the loans were actually taken out by fraudsters that were using the personal details of the Brits that are now getting the blame. The company that is sending the debt collectors to pursue these people is Help Loan, which is based in Finland. Help Loan claims that it has cost at least £1.5 million as a result of this fraud.

Help Loan is now said to have taken steps to increase security, due to the ease with which the fraudsters managed to take out loans using others’ details. The company only started trading in the UK earlier this year, and offers working consumers short term loans of between £50 and £300, which must be repaid within twenty eight days and with very high rates of interest.

One of the Brits that has been pursued for a loan that was never taken out said that the company needs to improve its verification processes to try and reduce the risk of this sort of fraud. She said she had received a demand for repayment of a loan, and when she checked with the company they had her correct date of birth but had bank details that were not hers.

She said: “They need to make their whole site a lot more secure and be sure that the person who is applying for the loan is the person they say they are.”

Tags: site, personal details, Interest, theft, Financial services, company, brits

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Payment shock for borrowers if interest rates rise

Saturday, October 16th, 2010

Officials have expressed concern that many homeowners in the UK could be left facing financial hardship if the base interest rate increases, and some have suggested that those that are in danger of facing higher repayments may want to do some forward thinking and look into safeguarding themselves against higher repayments.

Industry experts have said that interest rates in the UK could start increasing as early as next spring, and for those that are on variable rate mortgages and have been enjoying the rock bottom interest rates there could be a sudden payment shock as they find that their monthly repayments suddenly soar. One official said that homeowners needed to brace themselves for the possibility of an increase of possibly 2 percent over the next year or two.

One expert said that it was worth homeowners on variable rate mortgages considering the low rates of interest now available on fixed loans, and safeguarding themselves by switching to a low rate fixed mortgage for a few years. This would then protect them from unexpected repayment increases if the base rate was to increase over the next year or two, as their rate and repayment would then be fixed for the specified duration such as two or three years.

Andrew Montlake, a mortgage advisor, said: “As rates have fallen to historical lows people should be taking advantage of some of the attractive fixed rates on offer. While it is nice to be on a low tracker rate, this can change quickly and people have to be sure they can afford not just a 1 per cent rise, but possibly a 2 per cent rise in rates over the next year or two.”

Tags: Interest, Fixed rate mortgage, mortgage, finance, Variable-rate mortgage

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Shapps wants interest rates to be kept low

Thursday, October 14th, 2010

In a recent speech a member of the Monetary Policy Committee, which votes to set the UK base interest rate, said that he believed the base rate needed to increase from its all time low of just 0.5 percent. Andrew Sentance has voted since June to have the base rate increased, believing that this is the only way to curb spiralling inflation.

However, the UK Housing Minister, Grant Shapps, has stated that it is necessary to keep interest rates low for as long as possible in order to ensure that homes are more affordable and keep the property market buoyant. He was speaking at the conference for the homebuilding industry in London recently, and said that at present people simply couldn’t afford to buy homes and couldn’t get the finance that they needed to do so.

He said that last month interest rates on a 75 percent loan to value mortgage were at a record low of 3.79 percent on average, and he said that this had resulted from measures that the government had taken to try and reduce the public deficit as well as from the base interest rate, which has been at its lowest level in the history of the Bank of England for the past nineteen months.

Shapps said: “It’s really important that we keep interest rates low for as long as possible. The biggest problem at the moment is that people can’t afford to buy your product because they can’t get the lending to get it.” He added: ” We need a housing market that is best described as boring,” he said. “We can’t go on thinking that your home is your investment, your retirement plan, and your roof over your head. We have to live in a country where housing becomes over a long period of time more affordable, and that means steadier house prices without boom or bust.”

Tags: finance, interest rate, Grant Shapps, Interest

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Consumers should shop around for personal loans

Wednesday, September 8th, 2010

Officials from a financial group have recently reiterated the importance of shopping around for the best deals for consumers who are looking to take out a personal loan. The advice comes from Sainsbury’s Finance, with officials from the firm stating that consumers could potentially save a small fortune by taking the time to shop around for personal loans rather than going for the first loan they come across.

Personal loan rates are said to have been rising recently despite the fact that the base interest rate is at an all time low of just 0.5 percent, and this is particularly true for smaller personal loans of less than £5000. Some consumers may find therefore that they are better off going for a slightly larger loan and paying less interest than a smaller loan that comes with a higher rate of interest.

With interest rates on personal loans on the rise it has become all the more important for consumers to compare the different rates and terms on loans from a range of providers before making a decision or commitment. Steven Baillie, head of loans at Sainsbury’s Finance, said that consumers looking for a loan of around £10,000 could potentially save a massive £1000 by shopping around.

He said that many people were paying over the odds for a personal loan even though they didn’t have to, and that by shopping around they could have saved a fortune on their overall cost of borrowing. With Sainsbury’s consumers are able to apply for a personal loan of between £7500 and £14999 with a typical APR of 7.8 percent.

Baillie said: “Ultimately, you must make sure you’re getting the best possible rate for your requirements and not paying over the odds, because you don’t have to.”

Tags: Sainsbury's, finance, credit, loan, Interest

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What will happen with the base rate and mortgage rates?

Tuesday, August 31st, 2010

Since March of last year the base interest rate in the UK has been at an all time low of just 0.5 percent, which is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. However, with inflation getting out of hand it is highly likely that at some point in the near future the Monetary Policy Committee will have to consider increasing the base borrowing rate.

Whilst nobody has a firm idea of when any base rate increase may take place there has been speculation over how quickly and rapidly the rate may rise. Some believe that the rate will be increased this year in order to keep a lid on inflation, whereas others believe that it is more likely to be early of mid-2011 before any rate rises are implemented due to the continued fragile state of the economy.

One industry official has suggested that the base rate could increase surprisingly rapidly over the next couple of years, going as far as to say that the base rate could leap from its rock bottom level of 0.5 percent to as high as 8 percent within the next couple of years.

For homeowners with mortgages this could spell really bad news, as it could mean mortgage rates rising to 11 or 12 percent, which could add hundreds of pounds a month to the average mortgage. With some people still suffering financial problems because of the recent recession and job losses this could have a really negative impact, and could leave many people unable to afford their repayments, which could lead to rising repossession numbers.

With this in mind it may be worth homeowners looking at their options when it comes to their mortgages. Whilst nobody should rush into taking drastic action as a result of the rumours and speculation it is always advisable to have a good idea of the options available so that you can be prepared for when the base rate does start to increase.

For many the choice of a fixed rate mortgage may be a tempting one to protect them from huge increases in interest rates, but before making any changes or committing to any particular mortgage deal it is well worth seeking advice from a professional and experienced independent financial advisor to ensure that you get the best deal.

Tags: Interest, bank of england, base rate, mortgage, Mortgage loan

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Few banks lending to new customers

Tuesday, August 31st, 2010

The global financial crisis and the recession has led to the near collapse of the banking system in the UK, and were it not for the money from the public purse – which is made up of taxpayers’ money – many banks would have run into even more serious problems than they already have encountered.

During the financial crisis many of the country’s major banks had to be bailed out with the use of taxpayers’ money, but despite this recent research has shown that there are only a few banks that will now lend to new customers. The figures were revealed after one financial website carried out an undercover investigation via lenders’ websites, and last month it found that only four lenders were offering loans to new customers.

Around twenty six lenders’ websites were put under scrutiny as part of the investigation, and those carrying out the investigation determined that banks appeared to be lending to only carefully selected customers, and even then they were charging high premiums for the privilege. Interest rates on personal loans were found to be at their highest in ten years, even though the Bank of England base rate stands at just 0.5 percent, which is the lowest in the history of the central bank. The average rate on a loan of £5000 was 12.6 percent, which reflect how huge the margin between bank loan rates and the base rate has become.

An example highlighted by the officials that carried out the investigation was the Barclays site, which read: ‘You could be eligible for a Barclayloan Plus if you’ve held a Barclays current account for more than 12 months, paid at least £1,000 into your account each month, managed your account well and have a good credit history.’

Tags: Bank, bank loan rates, Interest, finance

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Why you should repay your credit card debt as soon as possible

Monday, August 16th, 2010

Although having a credit card is considered convenient and easy by most people it is all too easy to accrue debt on your plastic, and in many cases – especially in the current financial and economic climate – consumers find it difficult to repay the debt. However, those that have a high outstanding balance on their credit cards need to be very careful about how much they are paying off on the balance, as failure to make a big enough repayment could result in the debt lasting for years or even decades, and this is on a relatively modest debt. It is important to remember that by making minimum repayments you will not be making a dent in your outstanding balance but will merely by keeping things on hold, leaving you in financial limbo.

There is another major downside to paying only the minimum repayment on your credit card balance each month aside from the length of time it will take to make the repayments, and this is the amount of interest that you will pay. The longer your debt drags on the more interest you will be paying to the lender, and by sticking to minimum repayments you will end up paying an astonishing amount of interest on a relatively small debt.

Of course, not everyone can afford to make huge repayments on their credit debt especially in the current climate, and this is where it may be worth considering a balance transfer credit card that offers either 0 percent interest on balance transfers or offers a low rate of interest for the life of the transferred balance. This will make it easier for those with credit card debt to repay their debt without having to pay interest, as these cards offer a generous interest free period or a really low rate of interest until the transferred balance in repaid.

For those that feel that they can pay the transferred debt off within a year or so then a 0 percent balance transfer card may be best, and there are some that now offer interest free period of well over a year. However, for those that need to be very careful with their repayments and believe that they need to have a far longer period within which to repay the transferred debt a life of balance transfer card could be the ideal option.

Tags: Credit card, debt, Interest, credit

Posted in Debt News, Featured Articles | No Comments »

Payday loans been helping struggling workers

Saturday, July 31st, 2010

The recent financial crisis has left many people struggling financially, and whilst those that are short of money would normally have relied on an increased overdraft or credit card to tide them over financially in the event that they ran short of cash or had emergency bills this is no longer an option for some people due to tighter credit conditions.

The tighter credit conditions that have come into place have caused a real problem for some people, particularly those that have no savings to fall back on if the need arises. However, for those that are working there is another option available in the form of payday loans, which are designed to provide a short term financial lifeline to those that need small loans on a short term basis.

Often people are hit with unexpected bills, emergency repairs, and other unexpected costs before their payday comes around again, and this can create a problem if they do not have the available funds to pay. With a payday loan workers are able to borrow relatively small sums of money to tide them over until payday comes around, which can be a real lifeline for those that would otherwise be stuck.

There has been some bad press about payday loans over the past couple of years, mainly connected to the interest rates charged. However, consumers are reminded that the loans are only very short term ones and therefore the amount of interest that is actually paid is not a huge amount in most cases.

One consumer said: “I’ve had to use payday loans on a few occasions when I’ve run short of cash and they have been really useful. I don’t have savings or family to borrow money off, and when emergencies come up like essential car repairs I would be stuck without facilities like this.”

Tags: loan, Interest, payday loan, credit

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Why save when you have debts?

Thursday, May 27th, 2010

These days many people are dealing with the burden of unsecured debt, with many having to make repayments on loans, credit cards, store cards, catalogues, and other types of unsecured finance. The past couple of years have been financially turbulent for most people, and many have ended up increasing their debt levels and having far more to cope with in terms of their financial commitments.

Whilst the base interest rate is at the rock bottom level of just 0.5 percent at present this is not always reflected in borrowing rates, and for many the interest rates being charged on loans, credit cards, and stores cards is extortionate given that the base rate it at such a low level. At the same time the interest paid on savings is minimal, which means that those putting their money into savings accounts are getting little to no return.

With this in mind it is worth considering whether there is any point in putting money into any form of savings account if you already have debt to pay off. The returns earned on savings will be far outweighed by the interest charged on debts in most cases, and this means that those that have debts would be better off putting any spare money towards repayments of their debts rather than putting it into a savings account where they will receive very little in the way of returns.

Recent reports have shown that many savvy consumers have realised that they could be losing out financially by putting spare money into savings rather than  using it to repay debts, and this has seen the number of people that are paying down their debts rather than saving money surge. For many getting rid of high interest debt has become a priority in the current climate, with many wanting to rid themselves of the burden of debt as quickly as possible.

Credit cards in particular have high rates of interest, with the gap between the base interest rate and the interest rate charged on cards becoming increasingly greater. Consumers who have a balance on a high interest credit card would therefore benefit from transferring the balance onto a 0% balance transfer card or using their savings to repay the debt. This way it is possible to avoid the huge interest costs that some providers charged on credit cards.

Tags: Interest, finance, saving, debt, Personal finance

Posted in Debt News, Featured Articles | No Comments »

Continued popularity for variable rate mortgages

Monday, February 15th, 2010

Whilst there was a time when people wanted to avoid variable rate mortgages because of the high rate of interest attached to them many people at the moment are finding that these are the most cost effective mortgage types to opt for because of the record low interest rate that is still in place. (more…)

Tags: mortgage, John Charcol, Interest, Personal finance, Banking

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Interest rates to be curbed on pay day loans

Friday, February 12th, 2010

Over recent years pay day loans have become increasingly popular amongst certain consumers such as those that are on low incomes and those with poor credit ratings. (more…)

Tags: Loan shark, Better Banking Coalition, Interest, credit, finance

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Reductions being seen in personal loan rates

Tuesday, February 9th, 2010

It has been reported that finally the rates charged on personal loans rates may be starting to fall. For many this will have been a long time in coming, given that the base interest rate in the UK has been at an all time low of just 0.5 percent since last March. (more…)

Tags: personal loans, Personal finance, credit, payday loan, loans

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Property market more active than usual for this time of year

Thursday, December 10th, 2009

It has been reported that the property market in the UK is more active than usual for this time of year, with many people putting their Christmas shopping on hold to get on with the more important matter of getting a house. (more…)

Tags: Nick Chivers, Interest, Christmas, home buyers, debt

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