Past Articles for December, 2007

Credit card companies are likely to steadily increase their interest rates over the course of next year, one expert has asserted.

Samantha Owens from Moneyfacts is convinced that borrowers will be faced with increased costs and the potential for further debt management difficulties in 2008.

Introductory offers are likely to be made available, but in general credit card service providers will be aiming to offset the impact of the so-called credit crunch by raising their rates, Ms Owens has suggested.

She said: “[Customers should] keep an eye on their credit cards, make sure they check their statements and the little leaflets that are in there, to make sure that the interest rate isn’t going up every three months and they could actually switch to a cheaper deal.”

At the end of October 2007, the UK’s overall debt management burden was worth close to £1,390 billion, according to data compiled by the Credit Action charity.

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Billions of pounds worth of credit card debtlooks set to be switched from one provider to another in the early weeks of 2008, according to a recent study.

Research by Abbey found that around three million British consumers, who collectively account for close to £9 billion in credit card debt, plan to switch their service providers in the new year.

People aged between 35 and 44 are among those most likely to be taking advantage of a balance transfer offer over the coming months and men intend to switch considerably larger amounts on average than their female counterparts, Abbey reports.

“It’s great to see that many people are already turning their attention to getting their finances in order,” said Roger Lovering, managing director of Abbey Credit Cards.

“January credit card bills can often catch people by surprise, so we would encourage people to keep a check on their finances over the festive season and plan ahead to ensure they aren’t paying over the odds for their plastic.”

Apacs, the UK’s payment association, predicted that close to £11.7 billion worth of credit card debt would be accumulated across the country over the course of this month.

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British consumers who have accumulated significant amounts of debt over the festive season have been urged to consider ways to consolidate their arrears.

Alliance & Leicester suggests that by securing a low-cost debt consolidation loan, some of the UK’s millions of indebted consumers could avoid ongoing debt management agony.

The financial services firm maintains that its own unsecured loans can offer a competitive way for people with store card credit to find a debt solution quickly in the new year.

Samantha Owens from price comparison firm Moneyfacts said: “The new year is a great time to remedy any financial hangover you may be suffering from 2007.

“Store cards are undoubtedly some of the highest rates your will find. If you do find yourself with a debt hanging around your neck, then a personal loan may be a good solution.”

A recent report from the credit reference firm Callcredit insisted that more and more of the UK’s over-55s are struggling to become debt free.

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Heavy expenditure over Christmas has prompted many people across the UK to plan a modest new year celebration, according to recent research.

A study by Fool.co.uk found that the average amount that a British consumer plans to spend on new year’s eve is around £30.50, which is described by the financial comparison firm as “relatively thrifty”.

As debt management problems continue to worsen for Britons of all ages, Fool.co.uk reports that those aged between 18 and 24 plan to spend the most while seeing in the new year.

“With the average adult spending £419 on Christmas presents, money may be thin on the ground by the time December 31st arrives,” said David Kuo, Fool.co.uk’s head of personal finance.

“Therefore it’s commendable that we’re showing restraint on an evening that is essentially an annual blow-out.”

During the run up to Christmas, the Citizens Advice charity urged consumers across the country to stick to a strict budget to avoid a 2008 debt management hangover.

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Millions of people from across the UK have suffered financial damage as a result of heeding the advice of their friends and family, it has been revealed.

Close to a fifth of all adult consumers have made what proved to be unwise financial decisions on the basis of informal advice, which in many cases led to debt management difficulties, according to research from Birmingham Midshires.

People aged between 45 and 54 were among those most likely to have received bad money-related advice from their friends or family and Birmingham Midshires is convinced that professional help is the best option for people looking for financial advice.

Tim Hague, managing director of Birmingham Midshires mortgages, said: “While it may appear more accessible and less time-consuming to act on the recommendations of friends and family our study demonstrates that it really does pay to visit an expert.”

Meanwhile, Citizens Advice has offered a range of pre-Christmas budgeting tips with the aim of avoiding the anticipated rise in the number of people approaching its staff for debt advice in the new year.

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Credit card debt looks likely to fuel much of the spending on British high streets in the final hours before Christmas, according to recent research.

Figures compiled by Sainsbury’s Bank show that around £380.9 million worth of credit card debt will be accumulated by UK consumers on Christmas Eve alone.

Around 19 million people are expected to shop on Christmas Eve and close to one million indicated recently that they intend to do all of their festive buying at the last available opportunity.

Donald MacLeod, head of cards for Sainsbury’s, said: “It looks like the shops are going to be busy on Christmas Eve as a lot of people intend to do a significant part of their shopping then.

“Our research would indicate that the overall spend in the Christmas Eve rush is going to be considerably up on last year’s.”

Apacs, the UK’s payments association, expects to see around £11.7 billion worth of credit card debt accumulated nationwide over the course of this month.

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Money lenders around the UK are likely to increasingly tighten their credit criteria in the new year, one expert has asserted.

Neil Munroe, external affairs director for Equifax is convinced that more and more people will have their credit applications rejected in the early part of 2008, which could mean many Britons are unable to access a debt consolidation loan.

Furthermore, Mr Munroe suggests that financial service firms will begin to look more closely into a loan applicants’ credit history before making a lending decision.

“Lenders will be tightening up and looking more at minor misdemeanour data that may well have been ignored in the past,” he said.

“Therefore we might find people being rejected and move on to apply elsewhere.”

Figures from Credit Action show that around £222 billion was lent to individuals in the UK over the course of October this year.

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Many of the UK’s over-55s are struggling to maintain control over the
debt management situation, according to a recent report.

Figures from the credit report firm Callcredit show that around 16 per cent of all people in this age bracket are not aware of how much money they currently owe to their creditors.

Contrary to popular perception, it is not only younger consumers who are struggling to become debt free and debt management problems are impacting millions of older Britons as well, Callcredit asserts.

“The recent case of canoeist John Darwin, 57, is a sad tale of the desperate lengths someone is willing to take to break free of debt,” said Mark Ward, consumer debt expert at Callcredit.

“Our own research tells us that 16 per cent of over-55s cannot define their debt levels - it is a sobering reminder about the importance of being responsible when taking on debt and always thinking about how you will repay the money you owe.”

Apacs, the UK’s payments association, recently forecast that around £11.7 billion worth of credit card debt would be accumulated around the country over the course of this month.

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The Citizens Advice bureaux (CAB) in Northampton has highlighted some of the financial woes being face by the hundreds of local people who approach its staff for debt advice.

According to the bureaux’s own estimate, the 900 most recent indebted visitors to its centre had a collective debt management burden worth in excess of £10 million.

Close to fifth of all people approaching the CAB for advice have been in search of help with their debts, but bosses at the bureaux are convinced that their problems only represent the “tip of the iceberg” with regards local financial difficulties.

Martin Lord, from the local CAB, told the Northampton Chronicle & Echo: “The anecdotal experience is that people’s debt is getting bigger.

“The number of clients approaching us has increased and the amount of debt is more than it used to be.”

On a national basis, the Citizens Advice charity has campaigned for more to be done by businesses and regulators to slowdown the rapidly increasing
debt management burden of people across the UK.

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The UK’s housing market has begun a period of slowdown, according to the latest assessment of the Council of Mortgage Lenders (CML).

In November, for the first time since July 2005, the gross amounts of money borrowed to buy property in the UK fell during a month to a lower level than was the case in the same month of the previous year.

But despite the fact that millions of people around the country are finding a debt solution increasingly difficult to come by, the CML is convinced that consumers are still keen to borrow money to get on the housing ladder.

CML director general Michael Coogan said: “As we had forecast, lending in November dipped below its 2006 - equivalent for the first time this year and we expect this trend to continue into 2008.

“However, while lending will be subdued in coming - months we see this as primarily a result of lack of available funding rather than lack of consumer demand.”

Last month, the CML predicted that debt management trouble would result in more home repossessions next year than has been the case in 2007.

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