Debt Consolidation Advice, Help and News from Debt Advisers Direct

Sainsbury`s Bank: Credit card rewards worthwhile - if you redeem them

Thu, 17 Jul 2008 11:52:46 GMT

Sainsbury`s Bank has commented on the use of reward schemes for credit cards this week.

While the schemes are "absolutely" worthwhile, a small proportion of those who collect rewards actually redeem them, the bank said.

In the last 12 months, 8.19 million people collected credit card rewards yet three million redeemed them. According to the research by Sainsbury`s Bank, 42 per cent or customers said the financial rewards were too small while 40 per cent said they "could not be bothered."

Almost a quarter (23 per cent) said they didn`t know how to use the rewards.

Given these statistics, it may be suggested people are risking credit card debt due to schemes that will ultimately give no return.

Head of cards at Sainsbury`s Finance Donald MacLeod said consumers should explore the benefits of cards with such schemes.

"You might be spending merrily away and collecting all the points, but when it comes to the crunch you can`t do anything with them," he warned.

However, Mr MacLeod said collecting rewards was worthwhile for the majority of people and not redeeming them was a waste.

Sainsbury`s opened its bank in 1997, the first major British supermarket to do so.

Zurich: Retirees forced back to work

Wed, 16 Jul 2008 11:48:26 GMT

New research has found British people of retirement age are delaying giving up work or having to return to the workplace due to insufficient preparation.

Insurer Zurich said almost a third (31 per cent) of people of retirement age expect to return to work due to financial difficulties. A total of 64 per cent of those questioned are considering continuing to work after they retire.

The findings may cause concern for those currently struggling with their finances or facing debt problems.

Michael Portillo, speaking at Zurich`s recent conference on the credit crunch, said:
"The combined impact of the rising cost of living, rising inflation, fears of recession and the constant media coverage of the credit crisis, has created insecurity for a huge number of people approaching retirement concerned about their financial future."

Zurich is anxious that British people seem reluctant to seek financial advice for retirement, with research finding nearly three-quarters of those questioned have never spoken to an expert about the issue.

The research also found 94 per cent of people aged between 25 and 34 have never chosen to seek financial advice.

Equifax: ID fraud fear bigger than street crime

Wed, 16 Jul 2008 11:44:49 GMT

Nearly 20,000 British people have been victims of identity fraud, according to new figures from American Express.

This has led to the fear of identity theft growing bigger than a fear of being a victim of street crime, research from Equifax has suggested.

The online credit information provider said ID fraud is the fastest growing crime this century, so the conclusions of the research, carried out by Apacs, are not surprising.

People worried about being targeted by ID fraudsters and being forced into debt as a result are urged to protect themselves with some simple measures.

Equifax`s research indicated 87 per cent of social networkers publish their full name and 38 per cent their date of birth on their profiles, making information easy to find for fraudsters.

The survey also found 46 per cent store bank details and 16 per cent their Pin on their phones, Blackberrys or computers. This is described as "crazy" by Neil Munroe, ID fraud expert for Equifax.

Consumers are advised to never reveal or write down Pins, be vigilant when banking online and never keep financial information in handbags.

American firm Equifax has provided financial information for over a century.

Your Mortgage: US mortgage situation may lower UK confidence

Wed, 16 Jul 2008 11:43:25 GMT

The USA`s mortgage company situation will have "an indirect effect" on the UK market as confidence may be lowered, an expert has said.

Your Mortgage has commented on the problems faced by US mortgage companies Fanny Mae and Freddie Mac, which between them own or guarantee around half of the outstanding mortgages in the country, amounting to $5.3 trillion (£2.7 trillion).

Shares in the firms dropped by up to 50 per cent last week when they announced billions in losses due to an increase in defaults and possessions in the US housing market.

Those looking at mortgaging or remortgaging may be concerned about the UK market.

However, Pauline McCallion, editor of the independent Your Mortgage website, said a direct effect on the UK market would not be seen but buyers may lack confidence in the market.

"The mortgage markets are so interconnected at the moment so it probably will have an effect indirectly," she said.

Ms McCallion added the two mortgage markets work and are regulated differently. "The central banks in the UK, America and Europe all operate different policies when they deal with different issues," she said.

Your Mortgage offers news and advice on mortgages.

Bad news for homebuilders and homeowners

Tue, 15 Jul 2008 12:40:10 GMT

The UK’s economic problems aren’t limited to ‘just’ the credit crunch or ‘just’ the fall in house prices. Unfortunately, bad news often leads to more bad news: today, the credit crunch means many people can’t get a mortgage, which further depresses demand for – and prices of – houses, which means less money for homeowners, homebuilders and the whole economy.

Credit card rates `are on the up`

Tue, 15 Jul 2008 13:26:41 GMT

Research conducted by Moneyfacts for the Independent on Sunday has found that a number of credit card lenders are raising their rates.

High street banks involved in the increase include Barclays, Co-op, Royal Bank of Scotland and HSBC, the newspaper reported.

In total the Independent said 19 purchase rates have been increased over the last three months.

Michelle Slade, from Moneyfacts, said the scale of increase has not been seen before.

"Generally, hiking the purchase rate is considered a last resort for lenders, as they have to put this headline rate in their adverts," she said.

If lenders need extra cash, they usually increase fees for transferring balances or start charging customers to withdraw cash from ATMs, Ms Slade added.

David Kuo, from Fool.co.uk, said it was getting increasingly difficult for consumers to find a good deal and so they should seize the opportunity if they found one.

Earlier this month the debt consultancy company Thomas Charles warned consumers that credit card companies may start taking users to court in order to recover debts.

Fool.co.uk: Recession will harm those in debt but help first-time buyers

Mon, 14 Jul 2008 10:47:36 GMT

Financial website Fool.co.uk has said the predicted recession will be a help for those trying to get on the property ladder.

Those who have been "praying for a housing recession" in order to use their savings on an affordable property may get their wish, according to the British Chamber of Commerce`s (BCC) most recent Quarterly Economic Survey.

The figures indicate the UK is one quarter away from a recession with a correction period longer and worse than anticipated.

Fool.co.uk`s head of personal finance, David Kuo, said the recession may bring benefits to some homebuyers.

"The best thing that can happen would be if house prices fell to a level where they would be able to afford to get onto the housing ladder because these people have been putting away money for this opportunity," he said.

He added a recession also presents "a threat to people with huge amounts of debt", however.

The BCC surveyed nearly 5,000 businesses of varying sizes and found the service and manufacturing industries were being hit hardest by the credit crunch.

ABI: Consumers failing to protect themselves against financial uncertainty

Mon, 14 Jul 2008 10:46:17 GMT

Despite a number of large companies making job cuts recently, British people are deciding against taking out redundancy cover, a survey has shown.

The Association of British Insurers (ABI) has said the decision to decrease insurance payments is "worrying".

A total of 69 per cent of those questioned in the ABI`s survey, carried out by YouGov, said they were not willing to take out any protection insurance products in the future.

Meanwhile, 92 per cent said they believed the current economic climate to be worse than a year ago and 82 per cent expect it to deteriorate over the next 12 months.

This may lead to people getting into debt after being faced with redundancy without preparation.

Assistant director of ABI`s health and protection insurance, Nick Kirwan, said the economic outlook warrants protection yet few people take it out.

"It`s clear that we need to work harder to get the message across about the peace of mind and value that having the right protection insurance gives individuals and families," he said.

In related news, Rias has warned against cutting motor insurance to save money during the credit crunch.

Interest rate freeze `not helpful to first-time buyers`

Fri, 11 Jul 2008 10:41:26 GMT

Yesterday the Bank of England`s Monetary Policy Committee (MPC) announced its decision to keep the interest rate at five per cent.

The announcement to maintain the bank rate paid on commercial reserves came at noon.

However, this will "not provide any solace" to first-time home buyers, an expert has said.

Conveyancing firm Convex said the situation was "tough" for people trying to get onto the property ladder.

Duncan Samuel, managing director at Convex, said: "Although asking prices are coming down, mortgage rates are at an eight-year high and most prospective buyers are being asked for deposits of at least ten per cent, so things are still very tough, particularly for first-time buyers."

The MPC are likely to keep interest rates at this level in the coming months to "wait and see" what will happen next in terms of rising inflation and economic difficulties, Mr Samuel predicted.

Convex specialises in conveyancing online, introducing clients to solicitors and conveyancing specialists.

BBC Scotland looks at effects of debt on health

Fri, 11 Jul 2008 10:40:47 GMT

Volunteers have been sought to take part in an investigation looking at the physiological effects of debt.

BBC Scotland started the study yesterday and it will continue today (Friday July 11th).

The BBC has reported a two-fold increase in people applying for insolvency among those under 25-years-old in Scotland over the past five years.

It also cites the Samaritans, who have said more people are now calling with financial problems.

People concerned about their debt problems and those who are debt-free are asked to take part in the study, which will examine the effect debt has on health by measuring stress levels.

The tests will include questions about level of debt, income and state of health and participants will also be required to give a finger-prick sample of blood.

Willing participants between the ages of 20 and 30 and also between 50 and 60 are asked to contact the BBC to take part in the anonymous tests.

The Samaritans offers confidential emotional support for people living in the UK and Ireland.

Chelsea: Household bills eat into savings

Fri, 11 Jul 2008 10:40:05 GMT

Some British consumers are struggling with bills to the extent they are cashing in their savings, a new survey has indicated.

Chelsea Building Society`s poll said the costs of utility bills and council tax have caused 15 per cent of people to dip into their savings accounts.

The rising price of food has led to 14 per cent using their savings for grocery shopping while 12 per cent have spent their savings on rent or mortgage repayments.

Chelsea`s figures may create worries about future debt problems.

The building society`s director of customer services Darren Stevens described the situation as "a completely new phenomenon".

"We are concerned that many people`s finances are in real trouble due to the growing pressure of rising costs across so many essential items," he said.

Mr Stevens went on to recommend cutting back on spending on luxuries, "sensible budgeting" and saving money for the future.

In related news, this week the Post Office revealed over half of British consumers over the age of 50 are putting everyday expenditure on credit cards.

West Sussex consumers suffering debt

Thu, 10 Jul 2008 11:22:08 GMT

There have been more reports from local newspapers highlighting the effect of the credit crunch in the UK.

This week the Citizens Advice Bureau (CAB) in Derry, Northern Ireland, said they had seen growing numbers of people applying for bankruptcy in the area.

And yesterday the CAB in the town of Worthing, West Sussex, also reported a rise in people suffering credit problems.

Worthing CAB has seen a 35 per cent increase in debt issues in the past three months compared to the same timeframe in 2007, the Crawley Observer revealed.

David Chapman, manager of the Worthing CAB, said people are struggling with debt to the extent that they are using credit cards to pay for everyday expenses such as food and mortgage repayments.

Mr Chapman described the levels of debt as "horrific" in the newspaper.

He said: "£90,000 to £100,000 is no longer unusual and many are in the £500,000 plus bracket when one includes mortgage debt."

Lenders are becoming harder to find, he added.

Mr Chapman said individual voluntary arrangements (IVA) may be suitable for some people who are looking for an alternative to bankruptcy.

Fool.co.uk: Britons must prepare for recession

Wed, 9 Jul 2008 11:05:13 GMT

Financial website Fool.co.uk has said people must "tighten their belts" to prepare for the recession predicted by the British Chamber of Commerce (BCC) this week.

The BCC`s Quarterly Economic Survey concluded the UK is now at a serious risk of recession, expected as soon as the end of the year.

Home sales and orders and employment expectations are now at their lowest since the recession of the early 1990s, the report said.

Fool`s head of personal finance, David Kuo, said people must cut back on big purchases, save as much money as possible and consider income protection.

"People need to go back and look at their finances now and don`t take on any more debt than they are already in at the moment," he urged.

When asked about the threat of job losses under a recession, Mr Kuo recommended trying to live off two thirds of current salaries to make it easier to live with a lower income later on.

"If you can tighten your belt now and learn to live on a lower salary then you will be better prepared when a job opportunity comes along," he said.

According to Fool, a recession is at least six months of declining business activity.

Over 50s among "hardest hit" by credit crunch

Tue, 8 Jul 2008 11:33:03 GMT

Almost half of British consumers aged over 50 are using credit cards for everyday expenses due to rising prices and the credit crunch, new research indicates.

The Post Office`s report said 47 per cent of the over 50s are using credit cards for day-to-day spending, while a third (33 per cent) say they are unable to regularly put money away.

Figures also show three quarters (76 per cent) of consumers in this age group have more than one credit card.

The Post Office fears this will lead to consumers cutting back or overpaying on life insurance policies and urges policy holders to look at the long-term benefits.

Duncan Caesar-Gordon, the Post Office`s head of protection, said: "Thinking about the future and how the family will cope should the unexpected happen is an extra worry but a simple life plan can offer peace of mind to those concerned about passing on funeral costs and debts."

The study also found those over 70 are relying more on credit cards, with 64 per cent of the age group using cards to buy groceries.

Older people helped with over £350k of debt

Mon, 7 Jul 2008 11:41:54 GMT

The financial skills and confidence of older people in the north-east have been targeted in a project in Newcastle.

The first year of Help the Aged`s Your Money Matters project, supported by Barclays, has helped older residents deal with over £350,500 of debt.

One-to-one and group information sessions have made "a positive and tangible difference" to older people experiencing debt in the area, according to Janette Blythe, Barclays`s community relations manager in the north-east.

Mike Smith, Your Money Matters advisor, agreed: "When we launched Your Money Matters at Caring Hands a year ago we said we wanted to improve the skills, confidence and financial situation of local older people, and after a busy but exciting first year we`re well on our way to doing this."

The project is based at Caring Hands, which also offers information on health and welfare, free equipment loans and help around the home to promote the independence of elderly and disabled people.

Negative equity should be viewed within "the broader picture"

Fri, 4 Jul 2008 11:17:33 GMT

Homeowners fearing negative equity should look at the situation in the context of past price increases, an expert has said.

GE Money Home Lending has released figures showing negative equity should not be a great concern, as "equity cushions" were created when property prices hit record highs in the past few years.

An owner of an average London property bought in 1995, for example, would only experience negative equity if the price decreased by three quarters (72 per cent), according to the report.

Even houses bought with an average deposit as recently as last year are unlikely to see negative equity, as the analysis indicates a "cushion" is provided for a drop of up to a fifth.

Gerry Bell, head of mortgage marketing, GE Money Home Lending, urged homeowners "to look at the broader picture".

"Over the past decade homeownership has delivered fantastic returns for many borrowers and we would need to see unprecedented falls in property prices for the average home owner to be severely impacted," he said.

House prices have fallen by 6.3 per cent in the twelve months, according to information released by the Nationwide building society, but remain four per cent higher than two years ago.

Scotland avoids house price decline

Fri, 4 Jul 2008 11:16:10 GMT

Property in Scotland has avoided the national drop in prices, according to Nationwide`s recent figures.

While average house prices across the UK have seen a drop of 4 per cent this year, the building society has recorded a growth of 0.6 per cent in Scotland.

Fionnuala Earley, Nationwide`s chief economist, explained: "On most measures of housing affordability Scotland compares quite favourably with other UK regions, and this is likely to be the main reason why the correction in prices has been less drastic than elsewhere."

Additionally, mortgages are more easily available and house prices did not climb as high recently as in previous housing booms, said the report.

The price of oil has also created "pockets of strength" in oil-producing regions such as Aberdeenshire and Moray, where a price increase of seven per cent was recorded this quarter, bringing the average house value to £165,600.

According to the report, Edinburgh City remains the most expensive place to live in Scotland, with the average property price standing at £252,051 – an increase of one per cent this quarter.

In the UK overall, prices in London continue to be the highest with an average price of £285,568.

What is inflation?

Thu, 3 Jul 2008 16:11:23 GMT

Inflation is a measure of the average rise in prices of goods and services over time. In the UK, it is measured once a month by the Office of National Statistics (ONS), who compile a ‘basket’ of approximately 650 goods and services that represent the average buying habits of the public, and calculate the average rise in prices based on this.

There are two main measures of inflation that take different factors into account: the Consumer Price Index (CPI), which the Government use officially, and the wider-ranging Retail Price Index (RPI).

Online shopping: still going strong

Thu, 3 Jul 2008 16:14:25 GMT

As the credit crunch takes hold, people are beginning to wonder how far their money will stretch in the months to come. The High Street is just beginning to feel the strain: John Lewis recently reported a significant downturn in sales, with DSG (owners of Currys and PC World) announcing big yearly losses. So it may come as a surprise that online shopping is continuing to grow at an impressive rate.

According to a survey by Verdict Research, shopping online increased by 35% last year – going up to £14.7bn in total. If trends continue, they said, online retail sales will account for 13.8% of total consumer spending by 2012, reaching £44.9bn.

Growth in the face of a downturn
A spokesperson for Think Money said: “The news is surprising given the current market conditions. On the High Street we are seeing many people tightening their purse strings to make room for other costs of living, but it seems the same doesn’t apply to online shopping.

“It could be argued that it’s because shopping online tends to be a lot cheaper – not to mention that things like electronics are always going down in price – but it still stands that on average, people are spending a lot more.”

But the spokesperson was keen to warn of the risks of shopping online. “The prospect of handing over hard-earned cash can be enough to stop some people overspending on the High Street,” she said. “But it’s very easy for people to get carried away online, because there is no physical transaction being made.

“We deal with lots of people struggling with debt, and sometimes it can only take one or two impulse purchases before people find themselves in trouble.”

She continued: “If that happens, the most important thing is that it isn’t ignored. An expert debt adviser can look at your situation and find the best debt solution for you.

“For smaller debts, a debt management plan or debt consolidation loan might be the best way forward, or for bigger debts an IVA (Individual Voluntary Arrangement) could help.”

Fuel price hike sparks bankruptcy fears

Thu, 3 Jul 2008 10:01:50 GMT

Increases in fuel prices have led to some companies fearing bankruptcy, according to comments made in the Guardian.

Hauliers protesting against rising petrol prices in London this week have said their fuel costs have increased significantly this year.

"[Fuel price rises] are costing my company between £500 and £600 more per week since January. We`re only a small family company and we`ve passed some of our costs to our customers, but we can`t do it any more," lorry owner Manny Brookes told the newspaper.

Today it was reported the price of Brent crude oil has hit a record high of $145.75 (£73.30) a barrel.

Oxford business owner Steve Radvand told the Guardian his expectations for the future. "What will really happen is either we`ll all go bankrupt, or we`ll fold up the business before we can go bankrupt. That way, generations of hard work will all go to waste, and what will we do then?" he said.

Yesterday a section of the A40 Westway was closed to allow lorry drivers to protest against the increase in fuel costs.