by News Team on April 26th, 2011
Those who take out credit cards with low or zero per cent introductory rates could be setting themselves up for a financial problem in the future, it has been stated.
Spokesman for Moneynet.com Andrew Hagger warned this is something many people may be prone to do, even though a normal credit card application would see the customer look closely at how much the annual purchase rate (APR) is.
He continued: “With the interest free deals people tend to try and find the longest deal they can, so it can be 17, 18 or 20 months perhaps and they don’t really pay attention to when it finishes. I think that’s probably more where the problem lies.”
And this can lead to major debt problems, the expert suggested, with “higher than average” rates when the card reverts to its normal charges hitting those in debt hard.
Those who have fallen into this trap and have suddenly found themselves being charged high rates of interest could find seeking an individual voluntary arrangement (IVA) is the best way to deal with their situation.
An IVA will help reduce the amount owed by writing off interest and setting up reduced repayments to be paid off over a period of up to five years.
Provided these are met, any remaining debts will be cancelled at the end of this period, creating a fresh start.
Mr Hagger’s comments about introductory rates come after recent research by MyVoucherCodes.co.uk revealed 52 per cent of Britons have taken out credit without first checking the APR.
By James Francis
Posted in Debt Management | No Comments »
by News Team on April 21st, 2011
Credit card debt may increase as a result of some royal fans over-spending on next week’s wedding of Prince William and Kate Middleton, it has been suggested.
Such a warning comes from Co-operative Financial Services (CFS), which carried out a survey of celebratory intentions and found the average household is spending £267 on the event.
With some people being indifferent to the event, having republican sympathies or simply off on holiday because of the chance to take 11 days off using just three days of annual leave, this figure may be much higher for those keen to make the most of the big day.
Major items will include food, drink and commemorative bunting, but director of retail banking at CFS John Hughes advised people against going too far.
He commented: “Events like the royal wedding don’t come around every day and people naturally want to celebrate and mark the occasion. By ensuring that their spending is planned and budgeted for, people can ensure that they are spending within their means and can enjoy the excitement of the day, without worrying about a financial hangover in the aftermath”.
Instead of leaving themselves needing debt consolidation measures or another solution, people should budget wisely when spending on the festivities, Mr Hughes added.
Over a quarter of those planning a celebration will be having a barbecue, while 13 per cent will be at a street party.
Those facing a big bill after the weekend will include anyone spending it at a central London hotel, according to research from Santander indicating room charges will be hiked by 113 per cent for the occasion.
By Joe White
Posted in Personal Debt | No Comments »
by News Team on April 21st, 2011
When it comes to polite conversation in the home, certain subjects are taboo, with a new survey showing money is among them.
Financial issues are the third least popular subject to talk about in domestic settings behind sex and death, a survey by insurer Bright Grey has found.
But when it comes to brushing money issues under the carpet, the firm’s proposition director Roger Edwards said this would be like not doing the washing up – the third most unpopular chore according to the poll – but with far worse consequences.
He said: “It seems people would rather leave some things unsaid than try and deal with the consequences. The downside of not talking about issues, or putting them off altogether is the equivalent to leaving the washing up in the sink – it all builds up until it’s a lot bigger than it was originally.”
One outcome could be that a debt problem capable of being solved with early discussions on a plan to tackle it may simply fester out of sight and unresolved, until it gets much worse and needs more drastic action.
For those who have got into such a situation, individual voluntary arrangements (IVAs) may be the best solution.
These can reduce the overall level of debt, as well as establishing a regime of reduced payments to be made each month over a period of up to five years.
And for those who do not like to talk about it, an IVA is a confidential arrangement.
When it comes to being open about debt, some people may find it hard to even admit it to themselves.
Spokeswoman for the Consumer Credit Counselling Service Una Farrell said last month that many people with money problems are reluctant to take this step.
Posted by Paul Thacker
Posted in IVAs | No Comments »
by News Team on April 20th, 2011
The prospects of repossession may be falling for some people as the latest meeting of the Bank of England’s Monetary Policy Committee (MPC) saw no increase in support for a rise in interest rates.
Recent high inflation has led to speculation that there may be a change in the offing soon, something that could put more pressure on many homeowners struggling to meet their mortgage costs, to whom the cut to 0.5 per cent in March 2009 has been a lifeline.
However, the minutes of the April meeting that were published today (April 20th) showed that all nine members of the MPC voted the same way as they did in February and March.
Andrew Sentance remained the chief hawk, arguing for a 0.5 per cent hike, while Martin Weale and Spencer Dale continued to advocate a 0.25 per cent rise.
The other six remained firm in the view that the 0.5 per cent figure should stay for now, however, with Adam Posen also wanting to increase the asset purchase scheme. The other five wanted to keep everything as it is.
So while there is a four-way split on the MPC, this may no longer be an indicator of uncertainty and volatility, but a statement of fixed positions.
For those who do have mortgages and are struggling, of course, debt management plans may still be very useful and this will guard against any change.
However, there may be two reasons to think a base rate rise is some way off.
One is the fact that Consumer Price Index inflation fell last month from 4.4 per cent to four per cent.
The other is that Andrew Sentance is running out of time to influence change, since next month is his final MPC meeting before he leaves the body.
Posted in Houses and Mortgages | No Comments »
by News Team on April 19th, 2011
Talk of expenses may cause some people to think of the recent scandal in Westminster but while some politicians made claims for things they were not entitled to, new research has found many ordinary employees are failing to put in legitimate claims.
A survey by Concur revealed it is very common for those who are owed money for the costs they have incurred from their own pockets on work duty not to chase this up.
Presenter of the BBC’s Bank of Mum & Dad Lawrence Gold noted: “One in five workers are spending as much as £270 a year on expenses that they are not claiming back”.
Mt Gold was involved in the survey, which has sought to identify reasons for such non-claiming and he stated: “Three main reasons came back: one, they couldn’t be bothered with the hassle; two, they were too embarrassed; and thirdly, they didn’t want to because they felt guilty.”
He exclaimed that this was hard to fathom in view of the fact that times are tough and many people have strained budgets, while the sort of amounts lost are similar to the gains people make when they switch to cheaper utility providers.
Those with debts may find it is a very wise move to make sure they do indeed claim every time they have expenses to recoup, as every bit may help and if it is legitimate, there is no reason to feel a sense of guilt or embarrassment as if it were paying for a duck house.
Other findings in the Concur survey included the fact that one in 20 people spent as much as £600 a year that they did not claim back.
Posted in Personal Debt | No Comments »
by News Team on April 19th, 2011
Many people are getting into deeper debt than they should because they do not care enough about the level of interest they are paying, it has been revealed.
A study by MyVoucherCodes.co.uk revealed 52 per cent of those taking out credit have done so without checking the interest rate first.
Of this group, 32 per cent admitted they were in serious debt, which may indicate that many are literally paying a heavy price for not checking before they signed on the dotted line.
With such high charges faced, some could find themselves needing a debt management plan or even an individual voluntary arrangement (IVA).
Chairman of MyVoucherCodes.co.uk Mark Pearson said: “Interest rates and APR are something that any borrower should be fully aware of before signing up for anything.”
He went on: “It’s up to the lender to tell you all about the terms and conditions of borrowing money from them, but as we are all probably aware, that’s often something they hide in the small print.”
Mr Pearson warned that those who are vulnerable to high charges can include people taking out small amounts, because the debts on these can escalate quickly, not least when not paid quickly.
This description could apply to credit card debt, which may spiral out of control if people only pay the minimum amount.
People who do take out an IVA may find this brings the debt back under control, although it requires agreed payments to be made over a period of up to five years.
The debt cancelled by IVAs may have been a major contributor to the £182 million of debt written off each day in March, according to figures from Credit Action.
By James Francis
Posted in Debt Management | No Comments »
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