Past Articles for October, 2007

British consumers are preparing for a financial squeeze over the festive period, according to recent research.

With many people around the country struggling to become debt free, a study from Fool.co.uk has found that the average UK consumer intends to splash out around £400 on Christmas presents this year.

British women are likely to spend more than their male counterparts on gifts and parents are due to fork out more than those without children, the research also discovered.

David Kuo, head of personal finance at Fool.co.uk, said: “Christmas season can be a time of financial pressure for many, especially for people with large families.

“Nobody wants to be seen as Ebenezer Scrooge. But without proper budgeting January could be haunted by the ghost of Christmas past with credit providers tucking into our leftovers with some relish.”

A spokesperson for AWD Chase de Vere said recently that many families in the UK will add to their debt management problems over the Christmas period.

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Consumers have been warned to be wary of businesses making ‘cold calls’ and offering various deals designed to sound enticing.

According to the Which? group, there are now a number of companies operating in the UK who call unsuspecting consumers and make false promises about helping to sell their car in return for a cash payment.

“These companies charge a fee in exchange for helping individuals to sell their cars, but Which? research has found that many of the companies do not deliver on these promises, leaving sellers out of pocket and without a buyer,” a statement from the company read.

As a result of the number of unscrupulous cold-callers around the country, Which? advises people to check the terms of any deal to avoid becoming a financial victim and running the risk of debt management ruin.

Recent research by the Fool.co.uk found that 16 per cent of Britons are dishonest with their friends and family about the extent of their debt management problems.

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Shoppers who borrow money using store cards have been advised to plan ahead to avoid what could be a serious debt management headache.

With Halloween approaching, Nationwide has warned that credit consumers could find themselves facing some frightening repayment demands if they are careless about their store card borrowing.

In fact, the building society suggests that while introductory store card offers might be tempting, consumers should do their best to avoid what it calls the “horror of high interest rates”.

Jeremy Wood, divisional director at Nationwide, said: “Although store card introductory offers look great at face value, borrowers who are unable to clear their balances each month could find that they are paying over the odds.

“By taking a Nationwide credit card, shoppers benefit from lower interest rates and zero per cent introductory offers on purchases and transfers, making their money go that bit further when treating themselves.”

Figures compiled by Credit Action show that the typical British household now pays close to ten per cent of their take home wages on servicing interest on debt arrears.

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Accumulating credit card debt in an effort to keep up with mortgage repayment demands can be a beneficial financial move under certain circumstances, it has been claimed.

Stephen Rose, director of Debt Advice Bureau, makes clear that if mortgage debt interest rates are higher than those associated with a given credit card deal then paying off the former via the later may not be a bad move.

Mr Rose’s comments came after a recent study by YouGov on behalf of Shelter found that six per cent of British homeowners have paid off part of their mortgage through credit card borrowing.

“There are people out there who have technically bought a house on a credit card and they’ve done very well,” said Mr Rose.

“I bought my first property off the back of credit cards and the credit cards were a hell of a lot less than a mortgage,” he added.

Staff at the Debt Advice Bureau provide support services to thousands of people each month in the UK and the organisation operates on a not-for-profit basis.

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Millions of UK consumers are not aware of how much money they owe to their creditors, according to recent research.

Figures from Callcredit show that around 60 per cent of people cannot put an accurate figure on the extent of their debt management burden and close to 15 per cent are quite happy to admit they have no idea.

However, with so many people around the country struggling to become debt free, analysts at the credit reference firm suggest that being unaware of borrowing levels can lead to more financial woe.

“Don’t be a financial ostrich - take control of your finances and get a copy of your credit report,” said Callcredit’s debt expert Mel Mitchley urges.

“If you’re struggling with repayments contact a debt advice service such as the Consumer Credit Counselling Service (CCCS),” he added.

The burden of debt management in the UK is increasingly shifting onto more elderly generations, a report from the CCCS claimed earlier this year.

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A report from the CreditExpert company has pointed to a lack of awareness among UK credit consumers of how they are impacted by changes to the base rate of interest.

Many people face heightened debt management difficulties after rises in interest rates, but the majority of British adults do not accurately understand how their impact is felt, the financial services firm suggests.

Moreover, there is widespread ignorance among the British population about how exactly their finances are likely to be squeezed if annual percentage rates on their borrowings are increased, the company reports.

“The lack of understanding of key terms and the effect of interest rate changes is worrying,” said Jim Hodgkins, Managing Director of CreditExpert.

“It’s important for people to be familiar with standard financial terms and stay on top of changes that affect their personal finances so they can make the best possible decisions and choices,” he added.

The Bank of England has opted to increase the base rate of interest five times since August of last year.

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There are likely to be “huge” numbers of people relying on credit arrangements to fund their activities over the festive season this year, one expert has asserted.

Susan Hannums, savings manager for financial advisory firm AWD Chase de Vere, maintains that for many people around the UK borrowing money has become part and parcel of the Christmas period.

Millions of people around the country deal with debt management woes throughout the year, but Christmas now stands out as an “incredibly expensive” time, Ms Hannums makes clear.

“I think that we definitely have had way too many years of relying on credit and Christmas is one of those incredibly expensive times of the year,” she said.

“Credit has become so acceptable and so the norm that there is definitely going to be a huge amount of people who will depend on it for the Christmas season.”

Maintaining interest payments in an effort to become debt free costs the typical British household more than £3,000 on an annual basis, according to figures from Credit Action.

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As millions of UK consumers struggle to become debt free, a new study has revealed that people in the south-east of England are the more likely than those in any other region to borrow via a credit card.

Figures from the UK’s payments association Apacs show that three in every four adults in the south-east has faced credit card debts at some point, which is a greater percentage than anywhere else in the UK.

Meanwhile, Apacs’ latest research also reveals that consumers in the north-west of England are the most frequent users of cash machines and that those in the north-east are those most likely to make payments using a cheque.

Sandra Quinn, director of communications at Apacs, commented: “While the national statistics show that as a nation we are generally comfortable with the many types of payment methods available and good at managing our finances, there is always room for improvement.

“We should all be taking advantage of the wealth of payment options out there, so managing our finances is as easy, secure and convenient as possible.”

Figures released recently by Apacs show that record amounts were spent using plastic cards over the course of last year.

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A challenge laid down by the ifs School of Finance has received thousands of entrants as it aims to encourage a greater understanding of money-related issues among the UK’s young consumers.

Young people are increasingly finding themselves struggling to deal with debt management problems and the Student Investor Challenge has been designed to help buck this growing trend, its organisers explain.

The competition gets underway next month and offers students from around the country the chance to practice their money management skills by investing a fictional £1,000 on the stock market.

“Gaining and developing an interest in business, finance and investments through the ifs Student Investor Challenge is an incredibly useful experience and we are delighted that so many teenagers will again be doing so,” said Rod McKee, head of financial capability at the ifs School of Finance.

A report from NatWest suggested recently that many young consumers across the UK are reluctant to take the advice of their parents when it comes to issues of debt management and personal finance.

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Millions of young consumers around the UK would like to be better informed of financial issues, according to recent research from NatWest.

A study by the financial services firm makes clear that around 43 per cent of British teenagers feel they are not being given the tools they are likely to need to manage their money effectively.

With debt management an increasing concern for young people and parents alike, NatWest reports that almost six in ten people aged between 18 and 21 would not heed the financial advice offered by their mother or father.

NatWest’s head of youth banking Mark Worthington said: “The reality of today’s teenagers is that their financial circumstances are much more complicated than that of their parents at the same age.

“Many teenagers are taking on the responsibility of part-time jobs and whilst they want to enjoy some of what they’ve earned they also want to know how to manage money properly.”

Apacs, the UK’s payment association, recently launch a guide designed to help young consumers avoid unmanageable credit card debt.

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