Latest UK Debt News & Personal Finance | ClearDebt Newsdesk

Norwich Union points to the US where financial education is included and says that people are, on average, richer by a year’s earnings between the ages of 35 and 49.

“It pays to get clued up,” said Miranda Lewis, senior research fellow for IPPR Trading which also commissioned the survey.

“This research shows that when financial education is introduced onto the curriculum next year it could pay real dividends later in life.”

Ms Lewis said that in addition to financially educating the young, adults also need to be given information and support.

Without this, she fears that millions will struggle with their finances, keeping people stuck in the debt doldrums.

From today, new customers will no longer be able to move existing credit card debt to Amex as it takes action against people who switch from one provider to another when introductory offers cease.

Robert Kenley, head of cards at moneysupermarket.com, told website This is Money: “Although this is not the end of balance transfers per se for Amex, it does prove that for some providers recruiting customers by way of an attractive balance transfer rate is not always a viable business proposition.”

Consumers had been attracted to interest free credit card offers and switched credit card debt to take advantage of no interest.

If credit cards do stop giving interest free deals, it could mean that Britons will start having to face up to the large amounts of debt they are piling up on them.

JP Morgan’s study shows only a fifth of Britons understand basic pension terminology, such as defined contribution (DC) or defined benefit (DB).

“Confusing financial terminology is contributing to the UK pensions deficit and it is worrying that this is delaying half of the UK from taking out a pension,” said Jonathan Watts-Lay, director of JP Morgan Invest.

“Clearly, as a nation we are lacking basic financial knowledge.”

His comments come as more pensioners face a retirement of debt due to poor financial planning, with a Friends Provident’s survey showing that people think they could retire on a lump sum that only pays £44.24 per week.

However, JP Morgan claims that part of the reason for poor planning is complex pensions vocabulary, with nearly half of those without a pension blaming jargon for putting them off.

In order to help educate people, get them to plan for their retirement and not spend it in debt, Mr Watts-Lay said that a guide to pensions jargon was now being produced.

Experian believes that its new report will get rid of misconceptions about debt and the effect on individual credit ratings.

“There are a number of myths about the credit reference processes that have been perpetuated over the years, leaving many consumers baffled,” said Jill Stevens, director of consumer affairs at Experian.

“Many of these myths have no basis in fact. It is important that everyone understands how credit works so they can have confidence that the system really does work for them.”

Debunked myths are those that say that previous occupants affect credit ratings; that refused credit goes towards a rating; and that people can remove adverse information from credit reports for a fee.

However, while negative information from the rest of the household does not affect an individual unless they hold a joint account, bad debt and repayment history will affect a credit rating.

You can view Experian’s credit report guidelines here

He labelled inflation expectations “not of serious concern yet”, although many people already fear an interest rate rise that could push them further into debt.

His comments may fuel speculation that the governor is reluctant to increase interest rates from their current 4.5 per cent level in the immediate future. This is despite expectation that the monetary policy committee will raise the rate later this year, with one member this month already voting for a rise in the rate.

Other major economies have raised their interest rates this year, forcing up the amount that people on linked mortgages and loans have had to repay each month.

With more monthly debt to service, experts are already warning borrowers to start preparing for these extra payments.

While not ruling out a rise in the rates and pointing to “volatile” fuel prices, Mr King did add that inflation was currently around the two per cent target.

The Institute for Public Policy Research (IPPR) survey reveals that nearly five million parents need financial assistance for childcare, without which they risk being stuck in a debt cycle as they cannot afford to return to work.

“Further investment in affordable childcare is essential if the government’s targets to end child poverty and further increase the number of lone parents in employment are to be met,” commented Kate Green, chief executive of children’s charity Child Poverty Action Group.

Childcare costs around £142 per week, but can allow parents, particularly single ones, to return to work or go into training to boost their economic status.

Support comes through the Working Tax Credit but the IPPR believes it should be transferred to Child Tax Credit to make it easier to claim.

Without such action, the IPPR believes that many new parents will not be able to return to work, keeping many in a debt trap.

Friends Provident’s survey claims that a fifth of people believe that they could survive retirement on a lump sum of £50,000, but this only works out at a quarter of the weekly minimum wage to live on.

“The continued lack of understanding of pensions is a serious issue and by ignoring this, the British people are facing a pension time bomb,” said Jeremy Ward, head of pensions marketing at Friends Provident.

“This is a wake up call for consumers to start saving sooner rather than regretting it later.”

News comes with the proposed shake up of the pension system which means that many now face an uncertain future over the condition of state pensions.

Although current state pensions would top up the lump sum payments to £128.49 per week to live on, this still falls short of minimum wage payments and leaves little money to spare after the payment of essentials.

With pensioners liable to face rising utility and other bills, Friends Provident fears that unless people start preparing now, they will face their retirement stuck in debt.

Lloyds TSB’s Consumer Barometer report claims that two thirds of the population expects a rise in the interest rates during the coming year, pushing up the amount of debt they will have to repay each month.

Trevor Williams, chief economist at Lloyds TSB financial markets, said: “This latest survey indicates that households across the UK are bracing themselves for the inevitability that the next rate move will be a rise.”

Last week the Bank of England’s monetary policy committee voted to maintain the interest rate, but for the first time since May 2005, one member called for a rise.

A rise in the rates will mean that those on variable rate mortgages and loans will have to repay more each month, to the extent that many are advised to start saving now to afford this extra debt.

With Lloyds TSB’s report showing that only seven per cent of people expect a decrease in the rates, the majority of Britons cannot say they weren’t warned.

Says ClearDebt chief executive, David Mond: “Britons who believe interest rates are about to rise need to start cutting back spending now.

“Based on the old rule-of-thumb that a repayment mortgage costs a pound per percent per £1,000, people with a £100,000 mortgage could see their monthly mortgage bills rise by £50 – if rates go up by just half a percent.”