Past Articles for the Creditor Behaviour Category

A six-month debt of £1,000 that cost £69.25 in 2008 now comes at a price of £76.63, online comparison company Moneynet.co.uk has revealed.

The average interest rate on an authorised overdraft in February 2008 was 13.85 per cent and it has gradually crept up to be 15.32 per cent today- an increase of ten per cent.

These figures do not include Barclays’ recently announced plans to raise lending rates and Andrew Hagger of Moneynet.co.uk fears other banks may follow this example.

Mr Hagger suggested that lenders might cite the current risks of lending in defence of rising overdraft costs.

In addition, he said: “As and when the economy returns to a stronger footing and unemployment falls, I’m not convinced that the cost of borrowing will recede.”

Research by moneysupermarket.com indicates that five million adults in the UK - ten per cent of the population - are permanently in the red.

By Holly Brooke-Smith

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Barclays has upped its overdraft rate for the second time in six months, a rise that may anger people already in debt.

Around two million customers will be affected by the move from April onwards, according to thisismoney.co.uk.

Former students will suffer the most as Graduate account holders will witness a rate hike from 9.9 to 14.9 per cent.

A Barclays spokesperson commented: “We have to get the balance right between providing an overdraft facility and the associated risk.”

The changes, following on from similar increases in November 2009, will also see rate escalations on the following accounts: Premier Life (12.9 to 14.9 per cent), Current Account Plus (16.9 to 18.3 per cent) and First Additions (14.9 to 18.3 per cent).

They come after recent findings by The Children’s Mutual, which indicated that 93 per cent of young adults - between the ages of 18 and 30 - are still being financed by their parents.

By Joe Shervin

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Borrowers hoping to avoid the need for debt help could be set to benefit, as an expert has observed that interest rates are coming down.

Darren Cook, spokesperson for Moneyfacts.co.uk, noted that the first six weeks of the year have seen the costs of mortgages decline.

However, this is coming at the expense of savers, with Mr Cook stating that lenders are only able to compete by lowering the rates offered in this area.

“As long as the cost to borrowers keeps reducing, I don’t see it getting much better for savers in the short term,” he said.

The price comparison site representative went on to suggest that the situation is unlikely to change significantly until the Bank of England restores its base rate to a “healthier position” of three to four per cent.

He was commenting after moneysupermarket.com suggested that rising inflation has contributed to the damage done to savings this year.

By Andy Mackay

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Homeowners who have been unable to make repayments on credit debts may soon be offered greater protection in the courts, as the government has issued a consultation paper regarding this matter.

Justice minister Bridget Prentice noted it is essential to recognise the fact that the number of people in debt to creditors will rise because of the economic crisis.

“This could result in more people losing their homes because of relatively low levels of debt which they are unable to pay,” she said.

The current system allows a charging order to be placed on the homes of those who are not able to meet repayments on unsecured debts and this can be followed by an order for sale.

Meanwhile, moneysupermarket.com recently called for more information to be offered to those in credit card debt, with the potential consequences of just paying off minimum amounts each month made clearer to customers.

By Sarah Adie

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The rate of unsecured personal loans appears to be on the rise, reaching a nine-year high, in spite of the Bank of England base rate being the lowest it has ever been.

This is according the latest statistics from Moneyfacts.co.uk and spokeswoman for the company Michelle Slade noted that this could be put down to the fact that the market is so “risk adverse”.

“Lenders are only offering loans to the most creditworthy applicants and then at a premium,” she said, adding that unsecured debts are the first to go unpaid when people are finding it hard to make repayments.

Ms Slade recommended that borrowers ensure they shop around in order to find the best deals available, although they must remain cautious regarding the number of applications they make “as this will reduce their chances of being accepted”.

This follows recent comments from Moneysupermarket.com’s Tim Moss, who stated that good credit scores are essential for 2010 and Britons should monitor their ratings in order to ascertain how likely they are to be approved for financial products.

By Sarah Adie

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Britons have been advised to monitor their credit ratings, as this will help them ascertain the likelihood of being accepted for financial products.

Head of loans and debt at moneysupermarket.com Tim Moss described credit scores as “the must-have item for 2010″, noting that there are ways for people to make sure these are “as attractive as possible to lenders”.

The organisation has just launched a credit monitoring and identity theft channel that will allow users to track their credit profiles, as well as offering credit reporting and identity theft product comparisons.

“Consumers should remember that being turned down for credit is likely to have a negative impact on your overall credit rating,” Mr Moss said, adding that the tool will help people “find what they need”.

Meanwhile, the Consumer Credit Counselling Service recently introduced a new equity release programme to help older Britons avoid repossession and improve their quality of life.

By Sarah Adie

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Consumers with debt problems have been warned against trying to raise cash by selling gold jewellery to companies advertising on television.

Campaign group Which? explained that its investigation of such firms revealed that much better value can be found elsewhere.

Three gold items worth a total of £729 were bought for the purpose of the research, with the TV buyers typically offering six per cent of the retail value.

High street jewellers and pawnbrokers, meanwhile, quoted more than four times as much at an average of around 25 per cent.

Chief executive of Which? Peter Vicary-Smith described the results as “simply shocking”.

“The cash for gold market is unregulated and this investigation has raised some serious concerns about the fair treatment of consumers,” he said.

Last week, a survey by MGM Advantage indicated that retired people could be facing debt problems, as the cost of living has increased by £429 over the last year.

By Andy Mackay

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Those who took on credit card debt to pay for Christmas may find their situations exacerbated as interest rates appear to be on the rise.

This is according to the Bank of England, which published figures revealing that the average rates in December rose from 15.89 per cent to 16.28, the Daily Mail reports, noting that Capital One did so before the festive season.

One of the biggest cards available on the market, this climbed by seven per cent and some Britons were faced with charges of nearly 40 per cent.

And the publication further observed that typical rates are now at their highest since the latter part of 2006.

“The increases make a mockery of Gordon Brown’s claims that he would take steps to ensure credit card companies treated customers fairly,” it was stated.

This follows a recent survey conducted by Shelter, which found that an increasing number of people are using credit cards to pay off their mortgages, action that is being taken by one in 12 Londoners.

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Those seeking loans may increasingly turn to supermarket lenders over the next 12 months, as the “marketing potential” for such stores is huge.

This is according to banking specialist with Defaqto David Black, who noted that Tesco has announced plans to expand into the mortgage and current accounts sector.

He stated that food shops have “a lot going for them” regarding their reputations, adding that it is certain that gains in market share will be seen by supermarkets in 2010.

And Mr Black advised consumers to keep their eyes open regarding any new products that are brought out, saying: “You’ve got to pick and choose.”

“It’s very easy to find out what the best deal is,” he continued, given the “proliferation” of newspapers detailing “best buy tables” and the number of price comparison websites that exist.

Mr Black was commenting after a recent survey from uSwitch.com found that people are increasingly satisfied with the services provided by supermarket giants such as Tesco, while Lloyds TSB, Halifax and Natwest are out of favour for almost two million customers.

By Sarah Adie

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Britons have been warned against accidentally slipping into their overdrafts in January without authorisation from the bank.

Moneynet.co.uk’s Andrew Hagger recommended that, if people believe this could be a problem, they should contact their lender and arrange for an overdraft facility to be set up to reduce any fees incurred.

“The cold reality of a depleted bank balance will make bleak reading for some people who may struggle to avoid exceeding their limit before January pay day finally arrives,” he said.

Mr Hagger went on to note that the price tag for an agreed overdraft loan from the bank is much less than that sustained through unauthorised borrowing.

The website highlighted some of the charges applicable if this takes place, with Lloyds TSB asking for £155.54 if a limit of £150 is surpassed and the account remains overdrawn for seven days.

Mr Hagger’s comments follow recently released debt statistics from Credit Action, which found that 133 per cent of average earnings for British adults are owed.

By Sarah Adie

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