Past Articles for March, 2008

Securing a good deal on a debt consolidation loan is becoming more difficult for people in the UK, according to one expert.

Anna Sofat from the wealth management company Addidi has asserted that the credit crunch has seen many of the best interest rate offers on debt consolidation loans removed from the market in recent months.

In addition to reluctance of lenders to offer relatively cheap credit, the rises in interest rates in recent years has made it more difficult for consumers to borrow more money in an effort to become debt free.

“Rates might only have crept up a couple of per cent on two years ago but that’s quite a lot and where there’s been a real increase has actually been on mortgages, personal loans and secured loans,” she said.

Earlier this month, Citizens Advice reported that more and more people are approaching its staff for help with mortgage-related debt problems.

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British consumers who are fearful of their own financial future should seek advice about how best to proceed, it has been suggested.

According to experts at moneysupermarket.com, it is important for anyone struggling to become debt free or to keep on top of their outgoings to seek out advice from appropriate sources.

The comments from the price comparison firm come after its own research discovered that close to a third of consumers around the country are not sure how much longer they can cope with the kind of financial pressures they are currently facing.

“Anyone starting to worry about their financial situation shouldn’t bury their head in the sand - problems are easier to tackle when addressed early,” said Tim Moss, head of loans and debt at moneysupermarket.com.

Meanwhile, Fool.co.uk reported recently that debt management concerns and a gloomy economic forecast have seen more and more people in the UK look to tighten their belts over the past few months.

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The base rate of interest will be cut by a quarter-point next month, according to the assessment of one expert.

Howard Archer, chief UK and European economist at Global Insight, has made clear his view that the financial constraints around the country will lead the Bank of England to trim the cost of borrowing in April.

Mr Archer’s assertion came in response to comments from the members of the bank’s rate-setting monetary policy committee (MPC), which noted that credit conditions are worsening and that consumer spending could soon be significantly hampered.

A fall in the base rate would be good news for many of the millions of Britons who are trying to clear debt and improve their personal financial position.

“Today’s comments by Mervyn King and other members of the Bank of England’s MPC indicate that further interest rate cuts are in the pipeline and that there is a strong chance that the next one will occur as early as April,” said Mr Archer.

Last week, Chris Tapp from the Credit Action charity suggested that British borrowers need to fully familiarise themselves with the terms of a particular deal before taking on extra credit card debt.

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Many of the UK’s young consumers are neglecting to add to any kind of pension savings vehicle as a result of the debt management pressures they face, according to a recent study.

Figures compiled on behalf of Brewin Dolphin have shown that Britons aged between 25 and 34 are among those most likely to ignore their financial futures in the hope of becoming debt free in the short term.

However, it is not just young consumers who are putting their futures at risk, as Britons of all ages are struggling to save in light of their respective debt management burdens, the financial services firm has suggested.

Charlotte Black, director of corporate affairs at Brewin Dolphin, said: “Given tighter credit conditions it seems likely that pension payment breaks will become increasingly prevalent as the immediate pressures of servicing mortgages and dealing with
credit card debts take their toll.”

Last week, the John Charcol company urged homeowners not to panic and to seek appropriate advice if they are worried about their ability to meet mortgage repayment demands.

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As many as one in four people around the UK are reaching the state pension age while still having debt management problems to worry about, according to recent research.

Figures compiled as part of a Barclays and Help the Aged report have shown that more and more retirement-age Britons are struggling to meet their everyday expenses because of the costs of servicing their consumer debts.

The report also revealed that people who have debts when they reach retirement age now typically owe as much as four times more than those who were in the same situation ten years ago.

David Sinclair, head of policy at Help the Aged, said: “This report shows that there are some worrying trends in credit usage that could represent a debt crisis for those coming up to retirement.”

Meanwhile, a recent report from Fool.co.uk suggested that an increasing number of people around the UK are aiming to tighten their belts in an effort to become debt free.

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The financial constraints facing millions of UK consumers is likely to see many set off a relatively-inexpensive city break holiday this year, it has been claimed.

According to the Post Office, journeys to cities in Europe become particularly popular during periods of economic turbulence, as was the case after what is now known as ‘Black Monday’ in autumn 1987.

With millions of people struggling to become debt free, the Post Office is convinced that many thousands of Britons will head to an urban area, such as Budapest, Riga and Dubrovnik, in search of a good time on a budget.

“After Black Monday many people had to cut back on expenditure and there was a strong growth trend in two or three night short breaks,” said head of travel at the Post Office Helen Warburton.

“UK holidaymakers may well follow the same route this year.”

A report last week from online banking group Cahoot claimed that British holidaymakers are spending millions of pounds each year on goods they regret buying when they return to the UK.

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Life is “getting really tough” for families around the UK as the cost of living continues to increase, according to David Cameron, leader of the Conservative Party.

Mr Cameron’s comments came on the launch of a report commissioned by the Conservatives that shows British consumers are seeing their everyday expenses increase at a faster rate than the government’s 2.5 per cent inflation estimate.

Some of the main problems facing British families are reported to be sharp rises in council tax, train fares, food prices and energy bills, all of which are leaving people with increasingly difficult personal finance problems.

Additionally, interest rates are sufficiently high to leave many households with a serious debt management burden, Mr Cameron maintains.

“Why won’t they [the Labour Party] understand that life is getting really tough for people,” said Mr Cameron in response to the report his party commissioned.

Figures from the Credit Action charity have suggested that consumers in the UK pay out close to £93.2 billion each year to service the interest on the collective debts.

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A report from National Savings & Investments (NS&I) has shown that millions of British consumers are spending considerable sums on impressing prospective partners.

The latest figures suggest that British men anticipate spending at least £50 when going on a first date, while women except to spend around £30 under the same circumstances.

More than three-quarters of men say that they tend to overspend when taking a woman out for meal and almost a quarter would pay for the resulting bill through credit card debt, NS&I reports.

Overall, over one in four British men admit that they would be willing to add to their
debt management problems in order to ensure that a first date goes smoothly.

“There is no doubt that dating costs a lot, and many people in Britain need to think beyond impressing with wit and charm and also plan their finances,” said Dax Harkins, senior savings strategist at NS&I.

Earlier this week, Citizens Advice reported that more and more people are approaching its staff for help with their debt management woes.

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Millions of people around the UK are aiming to tighten their belts in response to the financial turbulence and gloomy economic forecasts of recent weeks, it has been suggested.

According to a poll by Fool.co.uk, almost two-thirds of consumers across the country are planning to cut back on the number of takeaway meals they eat and the same proportion is limiting their shopping sprees to save money.

Furthermore, with millions people trying to become debt free, more than one in ten Britons are planning to quit smoking in an effort to improve the state of their personal finances.

“When the going gets tough, the tough get going, and it’s reassuring to see that most of us are going to great lengths to cut non-essential spending from our budgets,” said David Kuo, head of personal finance at Fool.co.uk.

The credit reference agency Callcredit said recently that the problems in the banking sector around the world should act as a “wake up call” for individual consumers in the UK.

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Electricity and gas bills have increased by a collective total of around £1.5 billion over the course of this year, according to the latest figures.

Data from uSwitch.com shows that the typical household ‘dual fuel’ bill has risen by around 15 per cent in 2008, which is likely to leave many people struggling further to become debt free.

On an annual basis, the average Briton pays out around £1,153 to cover their energy costs, but many are missing out on easy savings by failing to convert to an online billing system, the price comparison firm has pointed out.

“Consumers have got to start looking out for themselves and shield their households now from the effect of future rises,” said Tim Wolfenden, head of home services for uSwitch.com.

The comments from uSwitch.com came after the Scottish and Southern Energy company announced it plans to introduce price hikes for its gas and electricity customers in the UK.

Figures from Credit Action have suggested that the typical household in the UK pays out almost £3,375 annually in order to service the interest on their accumulated debts.

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