Past Articles for June, 2007

Lloyds TSB has said that while 55 per cent say that they pay their bill as soon as they receive a red reminder, 27 per cent leave the bill for a further week before opting to clear debt from their account.

Furthermore, the bank has said that consumers are stressed by being indebted to companies in this way, with 21 per cent revealing that the red reminder causes them to feel this way.

Anita Hockin, head of internet at Lloyds TSB, said: “Nobody likes receiving a red reminder, it gives you the feeling you’re being told off!

“The huge number of people who admit to having received red reminders [66 per cent] proves that sometimes it’s a struggle to keep on top of paper bills.”

Research from Sainsbury’s Bank revealed this week that close to 2.8 million Britons are afraid to open their bank statements through what has been termed money fear.

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However, spokesperson Helen Saxon said that there needs to be “safeguards in place” to stop debt getting out of control, which can lead to people having debt management problems.

Ms Saxon added that credit - in the form of people taking on credit card debt or loans - is becoming more available to consumers.

“Credit does enable people to buy things that otherwise they couldn’t afford or that they would have to save up for a long time for,” Ms Saxon said.

“So we have seen credit available to more and more people as time has gone on and we have seen consumer spending pretty much propping up the economy.”

Earlier this week, figures from Alliance & Leicester revealed that 34 per cent of those using loans do so as a debt solution.

The FLA is a body that represents the asset, consumer and motor finance sector in the UK.

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Following the announcement that Mr Darling is to take over the position of chancellor from the new prime minister Gordon Brown, the Nationwide Building Society has said he needs to signal his intention to help financially-stretched Britons.

And with millions of consumers around the country facing debt management difficulties, the building society insists that the stamp duty thresholds should be brought in to line with the continually rising property prices.

Graham Beale, chief executive at Nationwide, said: “Alistair Darling will now have the opportunity to put through real reform that could help hard-pressed homebuyers and savers alike.

“He could give a clear signal to hard-working families that he is committed to really improving their finances.”

A report from the Consumer Credit Counselling Service earlier this year suggested homeowners in the UK will be “on the rack” financially throughout 2007.

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The National Consumer Council (NCC) insists that charges on current accounts are causing low earners to experience serious financial difficulties and pushing many families further into the debt management mire.

“Those on low incomes or with limited banking experience are most likely to be adversely affected. For them a default charge of £39 is enough to push them into debt,” said Ed Mayo, the council’s chief executive.

“It’s time banks stopped pulling the wool over people’s eyes and started behaving more responsibly.”

The NCC has called on the Office of Fair Trading (OFT) to oblige banks to give clearer explanations of their charging policies and to provide “basic” accounts that would give a straight forward service to the most vulnerable consumers.

Last week, the OFT highlighted the increasing problems many of the UK’s teenagers are having in finding a debt solution.

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As Gordon Brown assumes the leadership of the government, Mr Opik has urged the new prime minister to help make Wales a more affordable place to live.

“Every two and a half hours, people in Wales have to pay £1million to payoff the interest on their debts, house prices have gone through the roof and bankruptcies and repossessions are rising,” said Mr Opik.

“And we must drive down personal debt levels through quality financial education and measures to protect people from exploitation by credit and loan companies.”

He went on to equate the debt management problems facing Welsh credit consumers with a slowly exploding bomb that is affecting many thousands of people.

In the UK as a whole the personal debt level is rising by around £1 million every four minutes, according to Credit Action’s most recently compiled data.

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Despite worsening debt management problems for millions across the country, the typical amount spent by Britons on their partner is £62 per month, a recent poll of 2,000 adults discovered.

The study also found that men tend to be more generous towards their wives or girlfriends than women are in return, with the average British male spending £20 more each month on their partner than their female counterparts.

Sean Gardner, MoneyExpert’s chief executive, commented: “Consumer debt levels are at an all time high and while few of us are likely to rack up a debt based solely on present giving it’s worth considering whether it’s really necessary to buy expensive gifts when a small gesture can go a long way.”

Excluding mortgage arrears, the average household debt management burden in the UK is more than £8,800, according to figures from Credit Action.

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Stephen Rose from the Debt Advice Bureau insists that spending as little as 20 minutes assessing the offers available could help consumers avoid thousands of pounds worth of credit card debt.

Advice can be useful, Mr Rose maintains, but generally would-be credit card users need to understand what deals would be best suited to their lending requirements before taking up a particular deal.

“If [a consumer has] an existing balance on the credit card the type of card they are going to be shopping around for is the one with the best balance transfer deal,” he said.

“Whereas if they are using the card for purchases and have no debt, they are going to go for a card that has zero per cent on purchases for a year,” he added.

The UK’s overall personal debt management burden now stands at more than £1,325 billion, according to figures from Credit Action.

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Figures from Experian show that the average motor insurance premium in the direct market sector has risen by 7.9 per cent in the 12 months prior to May this year and this could be adding to the financial pressures of consumers facing debt management difficulties.

In May 2006 the average motor insurance premium from a direct seller would cost the UK consumer £519, but this figure stood at £560 last month, according to Experian’s latest research.

“The whole motor insurance industry is going through a period of transition and it is not as clear-cut as it was 15 years ago,” said David Murby, managing director of Experian’s insurance services division.

“Competition is aggressive and with technological advances and changing consumer needs, the industry is unlikely to settle back into a straightforward situation,” he added.

A recent report from confused.com suggested that car insurance premiums are altered considerably depending on the precise term an individual uses to describe his or her profession on their application form.

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Figures from Alliance & Leicester show that 34 per cent of people opting to take on a personal loan do so in an effort to find a debt solution, often after having been hit by high interest rates on credit or store cards.

The latest research by the financial services firm also shows that many UK consumers cannot afford to pay for a car upfront and instead opt to use a personal loan to buy a new vehicle.

“It seems that a lot of people are using a personal loan to buy a car, with 37 per cent of our borrowers taking out a personal loan specifically for that reason,” said Richard Al-Dabbagh senior personal loans manager at Alliance & Leicester.

“This isn’t too surprising as the finance deals offered at most car showrooms do not compete with our rates,” he added.

In February of this year, MoneyExpert research found that one in seven adult Brits had taken out a debt consolidation loan at some point during the previous three years.

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A survey carried out by YouGov for Capital One found that 99 per cent of British adults are aware of the issue of ID theft, but the majority of people do not know how to prevent it from happening.

And Capital One warns that ID theft can lead to innocent individuals being faced with sizable personal loan or credit card debts that they are obliged to pay off.

“The best advice for preventing ID theft is to take steps to protect your personal information by redirecting your mail when you move house, keeping important documents in a safe place and safeguarding your PIN and password details at all times,” said Sanjiv Yajnik, principal managing director of Capital One.

“Additionally, regularly getting a copy of your personal credit file from a credit reference agency will allow you to spot applications or accounts that have been set up without your knowledge.”

A report from the BBC in 2006 suggested that ID theft costs the UK more than £1.7 billion each year.

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