Past Articles for August, 2008

The rising cost of household bills is causing British consumers to become “very worried”, according to Prudential.

Director of lifetime mortgages at Prudential Keith Haggart said most people surveyed by the company said they had not been affected by the credit crunch.

However, he added: “But there were other questions in there about petrol prices and electricity prices and the vast majority said they were very concerned about the effects of rising fuel, petrol and food bills.

Asking questions in a different manner can suggest an alternative version of people’s opinions, Mr Haggart commented, revealing the British public is concerned about issues such as debt problems arising from the cost of living.

The research found 46 per cent of the public were worried about the credit crunch, while 85 per cent of people had concerns about the price of gas and electricity and 75 per cent had worries over the cost of petrol.

A consolidation loan may help those with debt management issues.

By Morwenna Kearns

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Students are not the only young people who may struggle with financial matters – and perhaps, ultimately, debt – a finance information provider has said.

Many teenagers are about to embark on a career or take on part-time work and are beginning to learn money and debt management for themselves. Moneyfacts, however, has suggested switching current accounts to get the most out of wages.

According to the finance provider, young adults can take advantage of accounts such as Alliance & Leicester’s Premier 21 account, which offers gross interest of 9.57 per cent on balances up to £1,000, or the Abbey Account that offers interest of 5.84 per cent on balances up to £500.

It went on to say that educating young people to save while they have a disposable income may help them in the long run.

“By teaching them the skills when they are young, hopefully we can stop another generation getting into as much debt and avoiding the financial mistakes that this generation has made,” said the report.

Parents can also help their family save money by buying cheaper school uniforms from various high-street shops, according to Which?

By Morwenna Kearns

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Couples who may otherwise be considering splitting are staying together to share the financial burden, according to cahoot.

Research from the online bank found more than a quarter of British people (27 per cent) are less likely to leave their partner because of the economic climate.

This equates to 12.4 million people who are scared of the financial problems and potential debt management issues that may arise from the single life – which may, according to the company, costs £266,000 more over a lifetime.

Matthew Timms, managing director, said couples can benefit from shared rent and bills and possibly cheaper car insurance.

“The cost of being single can extend to thousands each year, but with a little careful financial planning you needn’t be tied to your partner purely for financial reasons,” he added, however.

Also in the news this week, the Chelsea Building Society said family members are currently lacking the funds they would normally use to help each other.

By Morwenna Kearns

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In the same week that cahoot claimed more couples are staying together to prevent economic difficulties, Standard Life has said divorced women may take advantage of changes to pension rules.

Currently, pension members can take benefits from the age of 50 and withdraw 25 per cent as a lump sum, whereas the member’s partner, if a non-member, must wait until the age of 60 before benefits can be taken and is not entitled to a lump sum.

Since the member is normally the husband and the non-member is usually the wife in this situation, these regulations may have caused problems – even debt management issues – for women not yet at retirement age.

However, from next April these rules will be scrapped – action described as “long overdue” by Andrew Tully, senior pensions policy manager at Standard Life.

“Giving people more flexibility to take pension benefits when and how it suits them best is a welcome development,” he said.

The company stated that a third of marriages end in divorce in the UK.

By Morwenna Kearns

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A money information website has urged people to shop around for car finance.

Moneyfacts has said those looking for new 58 plate vehicles – available from next week – have a number of loans with varying rates of interest to choose from.

The advice could also benefit people who want a loan to buy and older car or for other reasons but are worried about debt management.

Forecourt finance may be convenient, the site said, but other lenders can offer a competitive rate on unsecured loans. Furthermore, looking for deals on internet and over the phone could save more money.

For example, the research found car buyers who choose the worst loan deal on the market could be paying £2,400 more for a £10,000 loan than the cheapest deal on the market.

Moneyfacts also recommends borrowers find out the exact rate offered as personal credit ranking may affect rates.

This tip could be useful for anyone talking out an unsecured deal, for example, a debt consolidation loan.

In addition, the Association of British Insurance has recommended shopping around for insurance to save money.

By Morwenna Kearns

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While insurance is often advised to protect against debt management problems arising from damage to homes, property owners may also want to consider how they may pay for home improvements.

According to research from Halifax, 80 per cent of people who took on home improvements the past year financed them with savings, which indicates many people are planning for renovations in advance.

Speaking about these figures, head of saving at the bank Tony Wilcox said they were “encouraging”.

“Using savings for such improvements means savers are really seeing the benefits of putting money aside,” he said.

He added that the study goes against “the buy now pay later culture” that many think is widespread in the UK.

However, the research also shows ten per cent of home-improvers risked credit card debt by paying for potentially expensive work with plastic. Some five per cent took out a personal loan for pay for work on their property.

This week, Fair Investment warned people to be careful to protect their credit card details from fraudsters.

By Morwenna Kearns

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People struggling with debt management problems can often turn to their families for help. But new research has found that families that may want to offer financial support are less able to.

The Chelsea Building Society said that the economic squeeze is preventing people offering help, such as a place to live or free childcare.

According to its research, 78 per cent of people are cutting back on their own spending and there is little left to help others. In the building society’s survey, 59 per cent of people would like to offer assistance but nearly 30 per cent are not able to do so due to financial pressure of their own.

Extended family members were less willing to help than close immediate faily, for example eight per cent offering somewhere to live compared to 54 per cent.

Director to customer services at Chelsea, Darren Stevens, said people should try not to rely on their relatives.

“Britons should start taking control of their own finances through proper financial planning and saving, bypassing a potentially embarrassing situation within their own families,” he urged.

People worried about debts from unpaid rent or mortgage arrears may want to consider products like a consolidation loan to avoid repossession.

By Morwenna Kearns

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Over three million workers in Britain are worried about keeping their job over the next year, according to research released by the Trades Union Congress (TUC).

The research, undertaken by YouGov, suggests redundancy may hit many employees – who may now be concerned about debt management issues arising from mortgage arrears and other problems.

According to the figures, workers in Wales are the least optimistic for the future, with a fifth saying they were “not very confident” or “not at all confident” when asked if they thought they would still be with their current employer over the next year, if they chose to be.

General secretary of the TUC Brendan Barber said the findings do not indicate three million extra people will be out of work next year, but workers are getting “jittery”.

“But there is a real danger that if everyone thinks that the downturn will be deeper than it needs to be it will become a self-fulfilling prophecy,” he warned, however.

This week, Legal & General said two-thirds of people are “over-estimating” the price of life insurance and are thus risking debts if faced with redundancy or illness.

By Morwenna Kearns

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Those approaching retirement age may be concerned about their income once they finish work and whether they will be able to live debt free.

According to Fair Investment, pensions are “pathetic” and do not provide enough money for older people.

It suggests equity release schemes as a potential way to top up pensions for property owners.

Of the two types of equity release scheme, the most popular is the lifetime mortgage, which is a loan secured against a home. The lender is repaid once the house is sold, whether it is after death or if the owner decides to move out, so it remains in the owner’s possession for as long as he or she likes.

The other option is home reversion plan, which involves selling the property to a reversion company or an individual but staying on as a tenant throughout retirement.

Chartered financial planner at Fair Investment, Sharon Bratley, said decisions should not be taken “lightly”.

“Remember, this is your home you are dealing with and you should seek extensive advice before taking out any kind of loan on your home,” she said.

For those worried about arrears and other debt management problems, debt advice is available from ClearDebt.

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Life insurance can protect against mortgage arrears and other debt management problems that may arise from a sudden lack of income, but many people are shunning cover because they believe it is too expensive, a poll has found.

Figures from YouGov, released by Legal & General, found 65 per cent of people over-estimated the price of £150,000 worth of life cover.

A healthy, non-smoking man aged 25 can expect to find life insurance for £8 per month, according to the financial services company.

However, of the people polled, 22 per cent thought it would cost over £30 and 18 per cent believed they could pay between £21 and £30. A quarter (24 per cent) expected to pay between £11 and £20.

Commercial director for housing at the company Karen Blatchford said life insurance cover can cost as little as £6 a month yet only 38 per cent of people surveyed have cover.

She added: “People may wish to consider covering not just their mortgage debt, but their family expenditure and bills.

“Most families would really struggle if there was an unexpected drop in the household income.”

According to National Statistics, 3.06 million working-age households are not in work.

By Morwenna Kearns

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