Finance Archive
Know Your Plastic
There are so many different types of cards available now, that it can be almost impossible to keep on top of which one does what and how much they’re costing you! Credit card, store card, debit card, pre-pay card… So what are they all?
Debit Cards
Quite simply, the card associated with your bank account. They are not credit cards as they take the money straight out of your bank account as you pay for something. Many current accounts also issue debt cards that act as cheque guarantee cards and most of the time, they work in cash machines to make cash withdrawals.
Credit Cards
Credit cards do not take the money straight from your bank account when you use them to pay for something. Instead, you are essentially borrowing that money and you repay it at a later date – often with interest. You’ll often get a monthly statement showing exactly what you owe on your credit card and the minimum monthly repayment is £5 or 3% of the balance (whichever of those two is the greater). Credit cards can usually be used in cash machines too, but you will generally pay quite a fee for a cash withdrawal on a credit card.
Charge Cards
These are frequently confused with credit cards. However, with a charge card, you will receive a monthly bill that you have to settle there and then in full and, on top of that, you will probably be charged an annual fee. Many of them come with predefined maximum spending limits.
Store Cards
Store cards are somewhat like credit cards – except that they are issued by one store and can often only be used to make purchases in that store. As with a credit card, you will receive a monthly statement and will have a minimum repayment to make. Again, interest often applies.
Pre-Pay Cards
These are sometimes known as “electronic purse cards,” and are simply an alternative to cash. You load money onto the card and then use the card to make payments. This is ideal for those who are a little uncertain about entering details online for cards that they have associated with a bank account. In addition, they are ideal for those whose credit rating is too poor to be able to obtain any other type of card. This is the newest of the cards on this list.
That should clear up some confusion – though the way we pay for things is ever changing and by this time next year, there’ll probably be something else new!
Uk Officially out of Recession
Figures released this morning indicate that the UK economy grew in the 4th quarter of 2009 by 0.1%. This means that the UK is formally out of recession.
We’re somewhat ehind some of European counterparts but the news is good nonetheless.
However, experts warn that these figures do not mean that all is well in the world. Retail figures are still disappointing, unemployment continues to grow and we are likely to feel the effects of the 18 month long recession for some time to come yet.
This aside though and the news of the growth could have a positive impact on consumer confidence and investor confidence as well, which in turn can go a long way to further repairing in economy during the first quarter of 2010.
The overall message from the experts is that it’s good news, but we have a lot of work to do yet.
What is to be hoped, however, is that the valuable lessons of this recession have been learnt and will be maintained. It would be disastrous for such lessons to be forgotten and for the UK to find itself facing a similar situation in years to come. The recession’s lessons were far reaching as a Post Office survey recently also found that we’re more financially aware, happier to talk about shopping thrifty and more conscious of our savings. Again, these lessons are some that will hopefully stick long, long, long after the official announcement of the UK’s exit from recession.
Cash for Gold Companies to Face Investigation
The Office of Fair Trading is crusading again. Well, less of a crusade and more of a quick peek really. They are ow investigating ‘Cash-for-Gold companies,’ who, they believe, may be taking advantage of consumers in debt by paying them ludicrously low rates for their gold.
The OFT is specifically challenging 5 companies and asking them to clarify and explain certain claims made in their advertising material and on their websites and to come clean about certain business practises. The watchdog claims that this is to ensure that these particular companies are complying with consumer protection laws.
This follows a number of consumer groups urging people not to use such services. Which? warned consumers of terrible value for money when using such companies to cash in their gold. And Which? it seems have done their research. They sent off three items worth, in total, over £700 to a number of gold companies to establish that they offer an average of 6% of the retail price.
Gold buying services have increased in popularity as the financial belts of Britain have tightened in the midst of the worst recession in a generation. However, there are now huge concerns that, rather than being a potentially useful service for cash strapped consumers, such businesses are offering rates so low that it could almost be considered a con!
The advice of the experts is that, if you must sell your gold, shop around and check pricing with independent retailers too.
Could Credit Report Errors be Costing you?
Banks and building societies rely almost entirely upon data from major credit agencies, when credit scoring applicants for loans and mortgages. The ‘lazy’ approach is being blamed for thousands of consumers with a good credit record, being declined credit owing to administrative errors on a credit report. If a credit report shows you up as having a poor score, you will almost certainly be declined for credit on the best rates and may have to opt for much higher interest rates on any loans or credit cards, or alternatively may be unable to get credit at all.
In a case covered on the Times Online recently, an investment banker and his wife were declined for a mortgage on what they described as their ‘dream property’ owing to flawed information from credit agency, Experian. As neither of the two had a history of bad credit, they were somewhat disappointed and disputed the credit information. Although credit agencies are able to rectify errors within 24 hours when receiving notification from the banks and building societies themselves, they responded to the couple by telling them they would look into the matter within 30 days. This eventually cost them the home they wanted to buy.
So what should you do if you believe there is an error on your credit report? Well, the first thing to do is to immediately ask to see a copy of the information, which is available to you at only the cost of a small administrative fee. This will give you the opportunity to find out exactly what is causing the problem. If the issue is something you do not believe is accurate, you should write to the credit agency and officially dispute it, providing all and any information you can. Credit agencies are obliged to respond to all queries and investigate thoroughly.
Insolvencies Hit a Record High
Personal insolvencies across England and Wales recently hit their highest number since records began in 1960. The Insolvency Service statistics for the third quarter of 2009 indicate that 35242 people were declared insolvent, which is a massive 28% increase on the same period of 2008. The 35242 insolvencies were made up of 18340 bankruptcies, 12390 Individual Voluntary Arrangements (IVAs) and 4505 Debt Relief Orders (DROs).
The Debt Relief Order is a relatively new alternative to bankruptcy for those with debts amounting to less than £15000 and assets with a total value of £300 or less. It was introduced in April 2009.
What these statistics do not take into account, however, is the number of debt ridden consumers embarking upon debt management plans. Given the informal nature of debt management plans, they do not officially count as insolvencies and there is no central register of figures kept, though an estimated 100000 are agreed each year.
Although not unexpected, the sharp rise is a cause for concern in a period in which unemployment continues to rise. Consequently, the fourth quarter of 2009 is forecasted to see a further increase on these figures, despite the fact that the recession is forecasted to formally end throughout the final three months of the year. However, experts warn that unemployment is likely to continue to rise for some time. As rising unemployment is thought to largely account for the rise in personal insolvencies, it is seen by many to be almost inevitable that the statistics will worsen as the year comes to a close.