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Retailers are rubbing their hands this Monday morning, following the last weekend before Christmas. It seems that eager shoppers were more keen even than last year to get out, in spite of adverse weather conditions in many places.

The weekend got off to a spend-happy start with Friday 18th December being the busiest day for cash withdrawals this year. In the house between 12pm and 1pm, the great British public withdrew £24000 every second! And it’s this cash that was used to line the tills of the country’s biggest retailers.

Despite a year that has seen over 700000 jobs lost, the Brits are still happy to spend, spend, spend across the festive season, with John Lewis reporting an increase in sales of 15% on last year! Capital Shopping Centres, the company who own the Metro Centre in Gateshead and a number of others around the country have recorded 7 million people visiting their centres in the last week.

Of course, what remains to be seen is how much of this Christmas spending will return to haunt consumers in the New Year. January is typically a month which sees the highest number of debt defaults. However, experts are warning that, after a financially dismal 2009 and an extremely high number of job losses, that January 2010 could be a record breaker in all the wrong ways.

As consumers, we are frequently reminded of the importance of exercising sensibility with our money. The average personal debt in the UK is over £30000 and so employing some conservative spending tactics is sound advice.

But if you think that the average personal debt is high, then you’ll probably be somewhat stunned by the public sector net debt of Britain. Yes, that figure is a staggering £829.7 billion. Yes, billion. And it’s rising rather rapidly. To be specific our national debt increased by £4268 every single second. Concerning? You bet.

The people with the power have come under fierce scrutiny, both for the rate at which it is wracking up debt and for the fact that the public aren’t being informed of some of the more concerning forecasts.

There’s a budget deficit of £178bn in the UK right now. Put simply, that means that public spending is £178 billion more each year than the Government income (for example, from taxes) is. And the Government has been criticised for failing to deal with it.

While Government debt is nothing new, our excessive debts are even leading to our “credit worthiness” falling in eyes of other countries. Call this the Government equivalent of credit rating damage. For the first time, recently, lending to the British was considered more risky than lending to Spain. This could indicate some real problems going forwards.

Of course, Government debt in an economic downturn is almost impossible to avoid. But seeing how the Government handles its debt management going forwards will be interesting….

There has been so much talk of unfair bank charges over the past few years and, more recently, of the Supreme Court decision that threatens millions of consumers’ claims. But there’s far less media coverage about unfair credit card charges.

Yet unfair credit card charges are being successfully reclaimed by consumers as we speak and are an entirely separate issue from bank charges. This means that they were not affected by the recent bank charges verdict.

Consumer law states that any charges levied by credit card companies on their consumers for late payments, or for going over the credit limit, must be proportional to the costs they incur. Yet some credit card providers have been charging up to £35 to send an automated letter! In 2006, the OFT declared that this was unfair and said it would investigate companies making charges of anything over £12 (though many believe that £12 is also excessive)!

However, while the OFT’s stance on credit card charges has little in the way of technical authority, it has made successfully claiming credit card charges much easier for thousands of consumers.

If you have have been charged over £12 in credit card charges in the last six years, you could also claim back money. This applies even if you no longer have that particular credit card – literally to any credit card charges at all within the past six years.

Last month, the Supreme Court overturned the decisions of both the High Court and the Appeal Court and ruled that the OFT is not authorised to assess the fairness of bank charges. This bank charges verdict came as a huge shock and disappointment to millions of consumers who thought they might be able to have the excessive charges refunded.

However, moneysavingexpert.com Guru, Martin Lewis, has been working with legal experts since the ruling in November. The Supreme Court seemed to almost hint that there might be other legislation under which the charges might be disputed and it’s this little flicker of hope that has led Lewis and the legal team to their newest campaign. They now believe that millions could claim bank charges back if the OFT launch another campaign to have bank charges deemed unfair under the Consumer Credit Act.

The Office of Fair Trading has yet to release an official response to the new legal findings. As things stand, there are an estimated 1 million bank charges claims on hold. If the bank charges are found, through whatever legislation, to be unfair and the banks are forced to refund them, it will cost them an estimated £10 billion.

As illustrated on the bank charges timeline the charges ‘scandal’ has been ongoing now since 2005 and it doesn’t look like there’s an end in sight just yet!

In the USA, prepaid credit cards and secured credit cards have been a thriving product for a few years now. However, we seem to have been a bit slower to catch on here in the UK. But we’re getting there…. While there is still little in the way of secured credit cards available, prepaid cards are really beginning to take off.

But what is a prepaid credit card? Well, essentially it is a payment card that works much like your debit card. You will have a pin number to enable you to use it at ATMs or in stores and it will most likely be a VISA card. The money you spend, however, will not come from your bank account or be applied to a credit card bill that you will receive later on. Instead, it will be deducted from an amount of money that you have already loaded on to the card. In this sense, what are commonly referred to as ‘prepaid credit cards’ actually work more like debt cards. So what’s the point?

Well there are a number of benefits to prepaid cards:-

• There are no credit checks to obtain them, which means they are ideal for those who, due to poor credit, are unable to get a bank account with a VISA/Mastercard.
• They offer security for those who shop online a lot (or offline even). If the card is not associated with a bank account, then if you are a victim of fraud, your bank balance is not at risk  by default of someone obtaining the card details.
• They are great for helping to control your spending. You could, for example, load on your entire Christmas shopping budget and you will know when you have spent up. The cards will not let you spend a penny more than what is loaded on.
• Prepaid cards are great for travelling and are widely used as an alternative to traveller’s cheques.
• Top up online or in the Post Office! Most providers permit these forms of top up while some offer other ways in which you can add money too.

Of course, as with anything, there are the downsides too. The disadvantages of prepaid cards:-

• Many providers charge an application and/or setup fee for prepaid cards.
• A number of prepaid credit card providers charge for ATM withdrawals, in much the same way a credit card provider would charge for this service.
• Some, though definitely not all, charge a monthly subscription fee.
• Some providers charge to renew your card at its expiry.

So the best thing to do is shop around and find the prepaid card that suits you. There are plenty available that do not charge a monthly fee, though most do have some form of charge at setup. However, each provider offers a slightly different package and reading the small print before you apply for anything means you can find the card that provides exactly what you need.

The Office of Fair Trading released some rather shocking statistics this morning. It says that half of all borrowers depend upon high cost loans simply to survive. This information comes just two weeks before Christmas, in what promises to be a very expensive festive period for many.

The OFT’s research found that 52% of people who borrow money are dependent upon some form of doorstep lending, which typically comes associated with astronomical interest rates of anywhere between 50 and 500% and it’s this type of borrowing that has huge potential to spiral beyond any control. A quarter of those people also admit to using doorstep lending on a ‘continuous basis,’ some continuing to lend to pay back what has already been borrowed.

Doorstep loans often involve small loans, usually around £300. These loans are always unsecured and the repayments aremade in weekly installments, to an agent who calls at house of the borrower to pick the money up. The nature of the loans and their often very high interest rates means they often come under scrutiny.

The Office of Fair Trading research also found that 26% of borrowers rely on credit cards and that 19% rely on store cards.

While the overall amount of credit has dropped slightly over recent months, something that suggests that the British consumers are tightening their belts in light of the recession, the number of people using these high cost loans is something of a worry to Consumer Minister Kevin Brennan, who said, ‘I’m concerned that so many people are relying on this form of high-cost lending.’

Christmas, in particular, can be an expensive time of year. Our tips on how to avoid Christmas debt may help to cut your credit need!

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.

Accountants, PricewaterhouseCoopers have released figures today that indicate the largest drop in income for a generation, for those considered middle class in the UK. And this is set to take place in 2010.

Taking into account forecasted increases in mortgages and tax, a family on an annual income of £30000 will find themselves approximately £6 a week worse off – or £300 worse off over the course of the year.

The wealthier are also expected to suffer, by around £5000 per year.

So while the forecasted recovery of the economy is certainly a good thing on a global level, it could see some short term belt tightening and potential debt problems for consumers in the UK. As well as tax rises, a freeze in the tax free personal allowance (as announced in the pre-budget report), petrol rises and general increases in the cost of living, those on above average incomes are expected to feel the pinch.

Financial experts are advising the well off to make the most of the incredibly low current interest rate to get as much of their mortgages paid off as is possible, as the repayments will certainly rise in line with the economic recovery in the UK.

January 2010 will also see the VAT rate return to 17.5%, following 12 months at a 15% rate, which was designed to stimulate consumer spending.

It probably comes as little surprise to most that debt and money problems can have a serious effect on your health. And debt worries don’t just cause mental health problems, but can have a detrimental effect on your physical health as well.

Stress, clinical depression, anxiety, sleeping problems and a loss of appetite are common amongst those with debt worries and all of these things can result in a negative effect on both your mental and physical wellbeing.

A recent document released by The Forum for Mental Health highlights the severity of the effect of debt on health. It states that half of the people in debt have some form of mental health disorder (obviously ranging in severity from the mild to the more serious). They put this in context by going on to explain that only 14% of those not in debt suffer a mental disorder of any kind. Their research has also found that people who owe money to five or more creditors are six times as susceptible to such disorders and that debt is also deemed by mental health experts to be an official suicide risk for those who suffer mental health problems.

These are particularly worrying statistics in light of rising unemployment. However, the facts and figures aren’t all doom and gloom. The research into the links between debt and health also found that between 84 and 90% of all those suffering debt related mental health problems saw significant improvement in 2 – 4 years when seeking the advice of debt advisors.

Anybody whose health is suffering as a result of debt would be well advised to seek assistance in dealing with the matter urgently. There are plenty of debt solutions and free advice available and seeking such advice out is incredibly likely to improve your state of mind.

It’s no secret that personal debt is something of a problem for the consumer driven society that we are. Credit cards, store cards, loans, buy now pay later, overdrafts… the list goes on and they all amount to one thing – spending money that we don’t really have. This in turn contributes hugely to growing debt problem facing a number of Britons. In fact, the average adult in the UK now has personal debt of over £30000 – or 133% of their annual income.

In a bid to curb this monstrous debt habit, the experts are advising that children should be taught how to manage their money. And it’s with this in mind that the Associated Press report today on three books about finance for children.

The Berenstain Bears’ Trouble With Money by Stan and Jan Berenstain is a picture and story book for young children aged 4 – 7. The Berenstain Bears are popular characters in children’s books and have been used to deal with a number of issues previously. And this is not a new book either – it was first published in 1983.

The Teen’s Guide to Personal Finance by Joshua Holmberg and David Bruzzese is a newer offering having been published for the first time last year. This offers information for young adults, much like the third book, Prepare to be a Teen Millionaire by Kimberly Spinks-Burleson, Robyn Collins.

Teaching Money Management is being recommended by personal finance experts who believe that educating younger people now can potentially prevent them from becoming debt ridden adults.