Posted August 17th, 2010 by admin | No Comments
The number of people in the UK taking out payday loans has quadrupled since 1996. This is despite some companies charging interest rates as high as 2,500% a year. With these high interests in mind there have been calls for the industry to bring in more safeguards to protect vulnerable lenders.
These figures on payday loans have been revealed by consumer watchdog Consumer Focus. The research suggests that as many as 1.2 million people are now taking out a loan of this type each year with combined borrowings as high as £1.2 billion.
For many people taking out a payday loan is a simple way of getting short term credit. If the loan is paid back quickly then it can be a cheaper option than a credit card or an unauthorised overdraft. However if the loan isn’t repaid then debts can escalate very quickly.
There have been many cases of people taking out loans finding they getting into financial difficulties. However the payday loans industry states that when managed properly the loans are an easy to understand and low risk option.
If you do find yourself short of money at the end of the month as you await payday then taking out a loan of this sort can be a good choice so long as you remember that it is only a very short term option.
Posted August 4th, 2010 by admin | No Comments
Over 80 percent of British shoppers have changed the way they shop in an attempt to cut costs and reduce debt.
Banking group Santander conducted a study into how the shopping habits of the UK public have changed during the current economic situation. According to the research over 50 percent of people now shop around for the best deal when buying their groceries. Over a quarter of those questioned have gone as far as switching to a cheaper supermarket.
With money problems and debt being a factor in many peoples lives it is no surprise that people are looking at ways to reduce their costs. Shopping around for the best prices and cutting down on unnecessary purchases is a great first step in preventing and reducing debt problems.
Posted July 19th, 2010 by admin | No Comments
Research conducted by BBC programme Panorama has revealed that UK high street banks are charging as much as 167% interest on unauthorised overdrafts. For authorised overdrafts customers are being subject to average charges of 32%, despite advertised rates of around 19%.
These charges are hitting customers at the worst possible time when the high rates of interest only serve to put people further into debt. Christine Ross at SG Hambros which examined the true cost of overdrafts urged consumers to read the small print on their account details.
She said ‘What we found is that unless individuals really scrutinise the small print the overdraft rates charged are far higher than they could even imagine.’
In the response the British Bankers Association reiterated that overdrafts are meant to be short term measures and are used by a relatively small number of banking customers for a few days at a time.
Posted July 15th, 2010 by admin | 2 Comments
Many people in the UK find that they have to face up to credit card debt problems at some point in their life. The convenience of credit cards combined with their high rates of interest means that it is all too easy to get into financial difficulties.
Credit cards should never be seen as a long term borrowing option. With average interest rates payable at 16% or more they are at least twice as expensive as an average comparable loan, so it makes sense where possible to minimise credit card spend in favour of less expensive forms of borrowing. If you do find that you are constantly struggling to make credit card payments then the first step should be to simply try to reduce how often you use your cards.
The high interest rates associated with most credit cards means that maintaining large levels of credit card debt is both risky and highly wasteful. By only making the minimum payment each month it can take years if not decades to clear credit card balances, all the while wasting an incredible sum of money in interest payments. If you owe money over several credit cards then it makes sense to initially concentrate on paying off the balance on the cards with the highest rate of interest. This way you are reducing the rate at which the debt is increasing.
You should also consider transferring the balance to another credit card which has a lower rate of interest. Credit card companies are very competitive and as such there are some very good 0% balance transfers and purchase offers available. Look to take advantage of these, but make sure you have a plan in place on how to deal with the balance when the offer finishes.
For more substantial credit card debt problems you may want to consider entering into either an informal Debt Management Plan or into an Individual Voluntary Arrangement (IVA). Both of these types of agreements will consolidate your debts into a single monthly repayment making it easier for you to manage your debts. Additionally they can stop interest and charges relating to the debt meaning that you are able to repay what you owe over a much shorter period of time.
Posted July 15th, 2010 by admin | No Comments
As many as 147,000 people will become insolvent in England and Wales this year – a 10% increase on last year. This is the finding of a survey carried out for insolvency trade body R3.
A spokesman for R3 said ‘We stand on the brink of a personal insolvency crisis that will take years to work through the system.
‘We know there are nearly a million people out there who are struggling with their debt. While it may be the case that these problems are resolved without help, there is a risk that they might spiral out of control.’
This news comes soon after reports that as the numbers of bankruptcies rise lenders are having to write off record amounts of credit card debt.
Posted July 14th, 2010 by admin | No Comments
Mobile phone users taking holidays abroad this summer could incur heavy charges just by having their phone switched on and could get into debt as a result.
This is according to research carried out by price comparison website uSwitch, who found that of the estimated 22 million people taking foreign holidays this year less than half will check the cost of using their phone. Aside from the possible higher cost of making calls and sending texts, phones with an always on internet connection could incur expensive data charges.
To reduce the risk of incurring excessive charges and getting into debt it is always a good idea to find out the cost of using the phone in your holiday destination before you go.
