Past Articles for July, 2007

Figures from Abbey show that around 2.4 million Britons have so many pin codes to remember that they often write them down and to be left in a wallet along with the relevant credit or debit card.

And with millions of UK consumers already dealing with debt management issues, these card users are running the risk of making their financial matters worse by giving would-be fraudsters an easy way to steal their money.

“With many of us holding more and more pieces of plastic in our wallets the challenge of remembering all those pin codes is getting greater,” said Abbey’s head of banking Steve Shore.

“But we really do urge you to try and commit them to memory rather than write them down. Otherwise it’s like signing a blank cheque for fraudsters.”

The overall personal debt management mountain in the UK is worth more than £1,335 billion, according to figures form Credit Action.

Share This

Duncan Philp, senior consultant at law firm and estate agent Macbeth Currie, insists that while British consumers generally had a fear of entering bankruptcy well into the 1990s, these concerns have largely faded away during the 21st century.

However, Mr Philp suggests that the debt management problems that lead an individual toward bankruptcy are often self-inflicted and brought on by too much credit card spending.

“If you go back ten years or so everybody would have been terrified to have been made bankrupt,” he said.

“Now it just seems to be a modern phenomenon that people are perfectly happy to go through and a few years down the line they’re back with money again.”

The Insolvency Service reports that almost 16,000 British consumers went bankrupt during the first three months of this year.

Share This

Despite the Office of Fair Trading setting a limit of £12 on charges charges, British consumers paid out at least £230 million in penalties to their credit card providers in the past year, according to research commissioned by moneysupermarket.com.

And the study, which was carried out by YouGov, found that as credit card debt problems were mounting up for millions of consumers, those in the north-east of England have been avoiding penalty charges most effectively.

“Penalty fees still affect a significant proportion of the population and providers are raking in some hefty cash,” said Rob Kenley, head of credit cards moneysupermarket.com.

The UK’s payment association Apacs revealed recently that more than £321 billion was spent on plastic cards in the UK during 2006.

Share This

While the typical annual expenditure for a British adult has risen by around four per cent since 2002, this figure stands at close to nine per cent for those aged between 65 and 74, according to Prudential.

Food price rises are believed to impact the incomes of elderly consumers more than their younger counterparts and for the last few years everyday groceries have been on the increase, the financial services firm asserts.

Gary Shaughnessy, managing director of Prudential’s retail life and pensions division, said: “When compared to the average home, older households see a greater share of their expenditure go on housing costs, fuel and household goods and services.

“In recent years these have seen some of the highest increases in costs, which helps explain why retired people are seeing a higher rate than the average in their annual expenditure.”

Earlier this year, a report from the Consumer Credit Counselling Services predicted that Britain’s debt management burden would increasingly shift to older generations.

Share This

The most recent Financial Activity Bulletin shows that around four million less Britons are planning to save, invest or borrow money over the next half-year than was the case 12 months ago.

And as debt management difficulties impact consumers across the country, the climate of rising interest rates is believed to be behind the reduction in financial activity.

“The latest Financial Activity Survey data reflects the straight-jacket many consumers find themselves in. More people have adopted a cautious approach to personal finances - seemingly preferring to focus on meeting monthly commitments and spending out of income,” said John Gilbert, author of the bulletin.

The Bank of England has opted to raise the cost of borrowing five times since last August, adding to the debt management pressures faced by millions of British consumers.

Share This

As the A-Level results day approaches, Lisa Taylor, from the money search engine Moneyfacts.co.uk, suggests that students should make sure they are getting a good deal from their banks when they set off to study.

And for those who take out loans or use credit cards, it is important to spend time assessing the available options before entering a particular deal, Ms Taylor insists.

“If you let things get out of control, you must remember financial mistakes at university are not wiped clean, and they can come back to haunt you later in life,” she said.

“Getting it right financially can be one step towards surviving those student years.”

A report from National Savings & Investments showed recently that thousands of British consumers do not worry about how much they spend in the hope that they will earn more money later in life.

Share This

Data collected by Fool.co.uk demonstrates that during April, May and June 2007 UK consumers went into debt to fund a range of purchases, including musical instruments, holiday homes and to pay for cosmetic surgery.

And the latest statistics show that around one in eight British borrowers took out loans in order to consolidate their debts during the same period.

“Borrowing money may seem like a convenient way to plug a hole in your spending plans,” said David Kuo, head of personal finance at Fool.co.uk.

“But a hole in your budget may be a sign of deeper problems that can often be solved, not by increasing net borrowing but by cutting gross spending.”

In the first three months of this year more than 30,000 UK consumers entered into an Individual Voluntary Arrangement in an effort to find a debt solution, according to data from the Insolvency Service.

Share This

Figures from Moneyfacts.co.uk show that British holidaymakers were charged more than £355 million for spending on plastic last year, which meant more debt management difficulties for many thousands of consumers.

Indeed, the latest data suggests that the amounts British consumers were charged for using their cards abroad last year could have paid for more than 300,000 family holidays.

Lisa Taylor, analyst at Moneyfacts.co.uk, said: “Many travellers are unaware of the level of costs associated with using debit and credit cards whilst abroad.

“While credit and debit cards can be a convenient way to manage your holiday spending, they can also put a dent in your holiday budget if you’re not careful.”

Meanwhile, uSwitch.com warned recently that by paying off only the minimum amounts required on credit card arrears many UK consumers could face decades of debt management problems.

Share This

A report from the South Wales Echo suggests that the average personal debt levels across the province have risen to £30,000 and millions of consumers face years of debt management problems.

In addition, the number of Cardiff residents using legal aid in an effort to win debt-related court cases is on the rise and increasing costs of borrowing are heightening financial pressures for Welsh consumers, the news service reports.

Paul Davies, director of the Legal Services Commission in Wales, is quoted as saying: “More and more people are reporting being three months or more behind with payments on their regular commitments and the average personal debt of visitors to advice agencies has topped £30,000.”

Meanwhile, the overall personal debt level in the UK is rising by around £1 million every four minutes, according to figures from Credit Action.

Share This

But, as debt management problems worsen for millions UK consumers, MoneyExpert has suggested that financial inaction could leave Britons missing out on potential savings.

Indeed, a full 5.4 million fewer UK consumers have switched their financial service providers in search of better deals during the second quarter of this year compared to the first, figures from the price comparison service demonstrate.

“The reality is that consumers are battening down the hatches in preparation for a rough ride as the mortgage becomes more expensive and disposable income reduces,” commented Sean Gardner, MoneyExpert’s chief executive.

“It seems we’re all taking stock of our finances - and perhaps switching is an unwelcome distraction in the current climate.”

More than 30,000 Britons entered into Individual Voluntary Arrangements during the first quarter of 2007 in search of a debt solution, according to data from the Insolvency Service.

Share This