by News Team on August 3rd, 2011
The debt problems faced by many consumers may not ease much despite a fall back in the extent to which food prices are rising.
In its latest survey of shop price inflation, the British Retail Consortium (BRC) has indicated the overall increase in prices was 2.8 per cent in July, compared with 2.9 per cent in June.
This was entirely due to a drop in food price inflation from 5.7 per cent to 5.2 per cent, while non-food inflation stayed put at 1.3 per cent.
BRC director general Stephen Robertson explained: "Good crops of seasonal fresh fruit and vegetables boosting supplies and cheaper animal feed easing the pressure on meat prices were the prime reasons food inflation fell, offering some respite to squeezed household budgets."
He went on to note that many consumers have been changing their shopping habits in response to food inflation over recent months, such as by focusing more on special offers – which now account for 39 per cent of food sales.
However, this may not be enough to help those who are in very deep debt, as any increase in prices will make it harder for those already struggling to make ends meet while confronted with hefty interest payments.
In such circumstances, consumers may consider debt management plans or individual voluntary arrangements as ways of tackling the problem.
While food prices may not be rising as fast, it is still outstripping pay growth.
The most recent official employment figures indicated pay settlements have been running at 2.3 per cent including bonuses, or 2.1 per cent when these are not factored in.
By James Francis
Posted in Debt Management | No Comments »
by News Team on August 2nd, 2011
It is not just adults who are suffering from debt and inflation problems, according to a new survey, with children's pocket money now being affected.
A Santander study has found half of children aged between ten and 16 have had the way they receive pocket money altered in the past three years, with this either being stopped altogether, reduced or only payable as a reward for work.
Such developments may be a reflection of the debt management problems their parents face, which could have reduced their ability to give money freely to their youngsters to spend.
And a specific problem faced by children has been what the bank calls "kidflation", where the goods they typically spend their money on have soared in price by 68 per cent more than the Retail Price Index (RPI) rate in the last three years.
Inflation-busting price rises have affected goods like sweets, soft drinks, children's clothing, entertainment and recreation, plus the cost of using mobile phones.
Santander's director of banking Nici Audhlam-Gardner observed: "Children are seeing the costs of their everyday purchases rising at a very worrying rate and parents are also being impacted with the costs of children's items apparently increasing more than the standard adult measure of inflation."
The increasing cost of children's clothing may be a particular concern, not least at times of the year such as this, when many parents will have to buy new uniforms as their kids prepare to change school in September.
Official RPI inflation was five per cent in June, while the Consumer Prices Index measurement of inflation was 4.2 per cent.
By Joe White
Posted in Debt and Young People | No Comments »
by News Team on August 2nd, 2011
It makes more sense to instigate a debt consolidation strategy than try to build up savings in the current economic climate, an expert has said.
Justin Modray of candidmoney.com said that with many people in debt, some of those who do have savings will actually be using them to pay off some of what they owe.
He stated: "I think for many it's more a case of just trying not to drown in debt and saving for the future remains a pipedream."
And Mr Modray noted there may be more challenges to come for those struggling to avoid their debt becoming unmanageable, due to potential further rises in the prices of food and domestic energy, as well as the impact of government austerity measures such as cuts and higher taxes.
The one crumb of comfort he was able to offer to hard-pressed consumers is that there should be "some respite through low mortgage payments," which continued low interest rates can provide.
Those who are keen to get debt free eventually may find that if they can pay off extra now on any debts linked to the base rate – such as overpaying on a mortgage – this may be a wise move, as it can save on interest charges later on when the rate goes up and monthly charges increase.
Mr Modray's comments follow the publication of Credit Action's latest statistics on debt, which showed that including mortgages, the typical UK household owes £55,803.
Another finding was that the amount of interest paid on debt in the UK is £177 million per day.
Posted by Paul Thacker
Posted in Personal Debt | No Comments »
by News Team on August 1st, 2011
New data has shown that millions of pounds have been written off every day in July as consumers seek solutions for their debts.
Credit Action's figures for the month showed that banks and building societies cancelled £20.71 million of personal loans every day of the month, something that may be related to consumer insolvency.
While the whole debt may be cancelled through a declaration of bankruptcy, an alternative is that of individual voluntary arrangements (IVAs).
These work not by writing off everything, but through an agreement with creditors to freeze the interest and accept lower repayments each month, which is binding on all to whom money is owed as long as 75 per cent of them agree to the deal.
It means lesser payments can be made over a period of up to five years, with all debt written off at the end, while the consequences for a credit rating and potential disqualification from holding certain positions of employment is not as severe as it would be with bankruptcy.
Another advantage may be that an IVA can be kept confidential, whereas bankruptcies are automatically reported in the weekly London Gazette and can be covered by the local press.
The gradual rise in the level of consumer credit borrowing may lead to more people needing to consider IVAs and the latest bank of England figures have indicated the level of increase was steady in June.
It rose by £0.4 billion in the month, in line with the average for the past six months.
By James Francis
Posted in IVAs | No Comments »
by News Team on July 29th, 2011
Some consumers may be avoiding buying homes because of the debt problems this may bring about.
House prices soared in the years before the recession and have since partly dropped back, but recent times have seen little change and this has been the case again in July, according to Nationwide.
Its house price index for the month indicated a 0.2 per cent increase in prices, making the average home value £168,731. In June there was no change at all.
Such figures are a sign that the market is showing little change at a time when the number of transactions is historically very low, Nationwide chief economist Robert Gardner suggested.
He stated: "Only 204,000 housing transactions were recorded in the second quarter of 2011, the lowest outturn since Q2 2009. No doubt much of this reflects the uncertain economic climate.
"However, some commentators have suggested that there may be more fundamental factors at play, such as a trend away from owner-occupancy."
That second comment may reflect a change in attitudes among consumers who are already burdened with debt from a range of sources, be it maxed-out credit cards, loans, overdrafts or the legacy of student loans and fees.
Some may judge that in such circumstances, buying a house is still too large a burden to take on.
Recent research by estate agency Rightmove showed selling a home is getting harder for many, with 70 per cent of properties on the market at the start of this year still being up for sale by June.
By Joe White
Posted in Houses and Mortgages | No Comments »
by News Team on July 29th, 2011
People who are deep in debt may find their hopes of being bailed out when a deceased relative's will is read out are dashed.
This is not just because they may get less than other family members, but because the biggest beneficiaries may not be human at all.
A survey by insurance firm More Than has found 40 per cent of people bequeath more money to their pets than they do to people.
While this may seem like a quirky thing to do – not least as cats and dogs don't have any credit card debt to worry about – there is a clear rationale in most cases, with 70 per cent of owners concerned their pet could end up in a rescue centre after they pass away.
More Than's head of pet insurance John Ellenger explained: "Pet owners are naturally concerned about the long-term care of their pets and many are taking the necessary steps to make sure they are provided for in their wills."
However, some provisions for pets go rather further, with a fifth of people leaving their pets the family home and other sentimental inheritances including favourite armchairs, photos of the owner and pet together, old shoes, jewellery and even the owner's ashes.
When it comes to the inheritance of homes, some may find their older relatives have opted for equity release to raise important funds in retirement.
That could include the homeowners' own debts, with the Consumer Credit Counselling Service recently revealing it helped people raise an average of almost £30,000 per household to pay off money owed in the last year.
Posted by Paul Thacker
Posted in Personal Debt | No Comments »
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