Past Articles for November, 2007

For millions of consumers across the UK dealing with debt management will be an issue for the new year and not for the festive season, it has been claimed.

A study conducted recently by Mintel concludes that the desire to enjoy Christmas will see British consumers set aside their financial concerns until January.

Record amounts of money are expected to be spent online and on the high street in the UK over the course of the next few weeks and many people look likely to put off the struggle to become debt free until the new year.

Richard Perks, director of retail research at Mintel, said: “During 2007 overall spending has slowed down, but our research shows that confidence is still remarkably strong.”

“The signs are that nothing is going to come between British shoppers and having a good Christmas this year,” he added.

A spokesperson for the Consumer Credit Counselling Service urged shoppers to ensure that their Christmas spending does not leave them facing debt management disaster.

Share This

A cut in the base rate of interest, which could help many people dealing with debt management difficulties, appears likely over the coming months, but the timing of the reduction is not easy to predict, one expert has made clear.

Reflecting on the minutes from the Bank of England’s monetary policy committee (MPC) meeting, Howard Archer, chief UK and European economist at Global Insight, concluded that there is “considerable uncertainty” over when to cut the cost of borrowing.

The base rate of interest has been increased five times since August of last year, but only two members of the MPC wanted to see it cut when they met earlier this month.

Mr Archer remarked: “Whether or not the first 25 basis point interest rate cut to 5.5 per cent comes as early as December, or is delayed until early 2008, will depend critically on just how weak the economic activity indicators are over the next couple of weeks.”

The Council of Mortgage Lenders recently forecast that borrowing costs will fall in the UK next year, but the number of repossessions will increase due to serious debt management problems for thousands of families.

Share This

Debt management problems have been made worse for close to one in four borrowers in the UK over the course of the past three months, it has been revealed.

Figures compiled on behalf of MoneyExpert.com show that debt problems are getting worse for millions of credit consumers and nine per cent of people claim to have added to their arrears by more than ten per cent over the past quarter.

Furthermore, over ten per cent of British borrowers are now “very concerned” about their ability to avoid debt management disaster, which is a four per cent greater proportion than said the same three months ago.

“With the festive season just around the corner, we can only predict that the number of people worried about their ability to deal with their debts is likely to increase,” said Sean Gardener, MoneyExpert.com’s chief executive.

“Christmas is a massively expensive time of year so you can’t help but worry that many more are likely to become increasingly concerned about how they’ll cope.”

Thousands of people from across England and Wales approach Citizens Advice about debt each month, according to the organisation’s own figures.

Share This

Home loans are likely to become more expensive over the course of the next few months, according to the Council of Mortgage Lenders (CML).

Financial markets in the UK and around the world have been pressurised in recent months and the effects of this looks likely to see money lenders up their rates, the CML suggests.

“The next few months will be a testing time as ongoing pressures in financial markets feed through into the wider economy,” said Michael Coogan, director general of the CML.

“Funding constraints will continue to restrict lending activity and make loans more expensive,” he added.

However, the Mr Coogan did note that the Bank of England looks set to lower the base rate of interest, which could provide some relief for the millions of UK consumers struggling to become debt free.

Earlier this month, the CML reported that mortgage-related debt management is becoming increasingly costly for first-time buyers across the country.

Share This

Household finances are being squeezed across the UK, but retailers are still expecting to see significant spending over the course of the next few weeks, according to one expert.

Richard Dodd, head of media at the British Retail Consortium, suggests that UK consumers are “feeling less well off”, but he maintains that the desire to have a good Christmas will see millions of people head for the high street in any case.

For many people Christmas has become a time to add to debt management difficulties and Mr Dodd is convinced that a lack of disposable income will not deter shoppers from spending hundreds of pounds on gifts and groceries.

“The facts show this year that disposable income has been falling because inflation has been rising faster than average incomes,” he said.

“But the thing with Christmas is that people usually… decide that they will have the presence of the food and drink they want for Christmas.”

The Citizens Advice charity recently called on the business community and regulatory bodies to do more to prevent debt management problems getting out of control for millions more British families.

Share This

The Consumer Credit Counselling Service (CCCS) is expecting to see many thousands of Britons seek out debt advice in the new year as a result of overspending during December.

James Ketchell, a spokesperson for the CCCS, has made clear that January tends to be the busiest time of the year for its debt management advisors and he believes the same will be true in 2008.

Mr Ketchell made his assertions despite reports that the so-called credit crunch has made it more difficult for would-be British credit consumers to borrow money.

However, he commented: “When people have £30,000 to £40,000 worth of consumer debt, one Christmas doesn’t make a difference but it might be the tipping point which pushes people over the edge.”

Figures from MoneyExpert.com show that more than 1.91 million people in the UK had their loan applications rejected over the course of the half-year to the end of September 2007.

Share This

Thousands of Farepak customers, who were left out of pocket when the Christmas savings group collapsed 12 months ago, are facing serious financial difficulties, it has been claimed.

Research by Unison and Kings College London found that as many as 122,000 people have found themselves unable to become debt free after they lost money when Farepak ceased trading.

Many of those impacted by the situation live on low-incomes and are struggling to cope with the financial fall out of what took place last year, according to the recent study.

Unison general secretary, Dave Prentis, commented: “Many thousands of low paid workers, including many Unison members, lost money and faced a bleak Christmas as a result of the despicable behaviour of the companies involved.”

“Companies should not be allowed to get away with this sort of daylight robbery and their directors should not be allowed to remain immune from the harm they have caused.”

The UK’s payment association Apacs recently predicted that British consumer will spend close to £53 billion over the course of next month.

Share This

The amount of money being chased by debt collectors in the UK looks set to increase considerably next year, according to the Credit Services Association (CSA).

It is anticipated that British debt collectors will be aiming to retrieve between £23.9 billion and £24.3 billion before the end of next year and there is potential for this figure to rise.

Millions of UK consumers are dealing with debt management difficulties and the debt collection industry is expecting an increasing amount of business over the course of the next few years, the CSA reports.

“Over-indebtedness will be accelerated by more fixed-rate mortgages becoming variable at higher rates and access to new credit becoming harder,” a statement from the CSA read.

“Consumers are tightening their belts against the background of a credit squeeze and access to credit is becoming increasingly difficult as lenders tighten their lending scorecards.”

A study carried out for Fool.co.uk recently concluded that millions of people in the UK consider talking about debt management issues to be impolite.

Share This

Borrowers across the UK are being squeezed as interest rates are increased by many of the most popular lenders, it has been claimed.

Figures compiled by MoneyExpert.com show that the average borrowing rate on an unsecured loan of around £5,000 rose considerably in recent months and now stands at close to 9.5 per cent.

According to the financial comparison firm, credit consumers who borrow the smallest amounts are finding debt management most difficult as lenders up the interest rates on these deals most sharply.

“Borrowers are feeling the pinch with those wanting to borrow less getting squeezed the most,” said Sean Gardner, chief executive of MoneyExpert.com.

“Lenders take the view that those borrowing more are in general a better risk than those borrowing less and offer better rates as a consequence,” he added.

During the third quarter of this year, close to 16,000 people in England and Wales entered bankruptcy by way of a debt solution, according to official figures from the Insolvency Service.

Share This

As millions of people aim to become debt free, a new study has revealed that around a third of UK consumers keep financial secrets from their partners.

Research carried out by the Carter Allen Private Bank found that more than a quarter of both men and women in the UK are dishonest about the costs of certain purchases.

Those aged between 25 and 34 were found to be among the most likely to lie to their partners about financial issues and millions of people admit to being dishonest about the extent of their credit card debts.

Richard Dunn, managing director of Cater Allen, said: “Since we were founded in 1816, financial etiquette has undoubtedly changed.

“While it has traditionally been considered bad manners to talk about money, this research shows that modern Britons are not comfortable with being upfront about their financial affairs too.”

The UK’s overall debt management burden increases by close to £1 million ever four minutes, according to the Credit Action charity.

Share This