With news that the Financial Conduct Authority have slammed the banks’ approach to overdraft charges to customers, we look at ways in which you can take control of your overdraft – rather than it control you.
We were always told by our elders to avoid paying anything on the drip, and have the cash ready to pay up front.
However, with big purchases, cash flow and the allure of the latest offers, things like store cards can be an attractive prospect.
But are they really the straightforward solution to managing cash flow, as they seem to be?Continue Reading…
Thanks to the rise of smartphones, there is a plethora of moneysaving apps available to download. Each app promises a new way of handling money, saving and reducing the amount of superfluous spending on things like clothing and takeaway coffees.
Load your smartphone up with these handy apps, and see how they can help your saving and spending on a day to day basis!Continue Reading…
Ever wondered how the richest people got to where they are? Of course it helps to be incredibly good at something, whether that’s playing music, making people laugh or creating an important piece of tech. But a lot of their long term wealth has to do with their attitude to money. In this post, we reveal how some of the richest people in the world view money in a completely different way to a lot of us…Continue Reading…
Will mis-sold payday loans claims become the next PPI claims?
Consumers who were mis-sold payment protection insurance policies have been making PPI claims for several years now. Providers have been widely criticised for the way the policies were sold.
However, one financial product coming under more recent scrutiny is the payday loan. Lenders like Wonga, Uncle Buck, Mr Lender and a host of others lend smaller sums of money to consumers just to ‘tide them over’ until their next pay packet. The loans typically range from £50 to £750 and the sum must be paid back on the consumer’s next payday.
In many cases, the representative APR on these loans is over 4000%. So, for example, if you borrow £400.00 with Wonga.com for 30 days, you would have to pay back £525.00, but failing to make a repayment for a year could leave you owing more than 40 times what you borrowed!! Martin Lewis of Moneysaving Expert wrote a witty, if not somewhat alarming post on how long it would take to amass the equivalent of the US National Debt after borrowing £100 from Wonga! That post garnered a lot of attention!
Could Mis-Sold Payday Loans Claims Realistically be Successful?
Realistically, in order for anybody to make mis-sold payday loans claim, they have to be able to prove they were mis-sold the loan. Payday loans companies are generally all very up front about the product, about the representative APR and about exactly how much will have to be repaid if you take the loan out.
With PPI, common complaints included not being told you had the product with your loan or credit card. That’s because PPI is effectively a cross sell from another product (a loan, mortgae or credit card). It’s different with Payday Loans. The payday loan is the product and the consumer is aware of the product, of the cost of the loan and of its terms.
So while finance bloggers and experts speculate on whether mis-sold payday loans claims, it only takes a quick glance at the websites of the biggest providers to see the lengths they go to in order to make their fees absolutely crystal clear to potential customers. Yes, they’re an expensive way to borrow money and yes, it’s very easy to find yourself amassing debts far higher than the value of the loan, but as long as consumers are made aware of what they are being sold and as long as the product remains legal, there is no mis-selling taking place.
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?
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 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.
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 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.
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!
Consumer driven Britain means more of us than ever are now turning to credit. We borrow money for all sorts of reasons, in the form of mortgages, credit cards, store cards and loans. But before you sign on the dotted line, there are a number of things you really should be absolutely sure to check. Here’s a ‘before you borrow,’ checklist:
- Is your loan secured or unsecured? This is crticial. Essentially, a secured loan would be one that could be secured against your home whereas an unsecured loan has no such “security,” behind it. If you go into arrears on repayments on a secured loan, you risk losing your home.
- Have you read the contract? And I’m not talking about skimming over it. If you are in the bank and the cashier’s tapping her pen impatiently on the table, it can be a little off putting, yes. But don’t feel pressurised to hurry up over signing the contract. Take it away from the bank, read it properly, reread it and get a second opinion on anything you’re not sure about. Don’t sign something you have not fully read and understood.
- Will you be charged to repay the debt early? If you were lucky enough to come into some money a year in to your three year loan contact, would you be able to pay it off without incurring any charges? Believe it or not, some lenders do charge for early repayment. It’s worth avoiding those at all costs. Double check!
- Is the interest rate static? Some forms of credit have an interest rate that can change! While a reduction in your interest rate would be a welcome bonus, there’s also the risk that the interest rate could rise suddenly, leaving you with a more expensive repayment than you initially anticipated. If you are happy that you can afford the interest rate as it is at the time of signing, make sure you are on an agreement where it cannot increase. This is one way in which thousands of consumers are caught out every year in the UK.
- What are the consequences of missing a payment? Obviously, nobody plans to miss payments (I hope!) but because life is unpredictable, you should know exactly what would happen if you were to miss one. It’s critical that you’re full aware of any penalty charges that might apply in the event that you do miss a payment. If the charges are excessive, don’t sign. Excesive penalty charges can result in a slippery slope between one missed payment and some serious debt problems.
- Is this the best deal available? Check the competition. Their offering on the same credit deal might be better!
- How much will you pay back? One of the most important questions you can ask is how much you will pay back in total. It is easy to be blinded by interest rates and monthly repayment figures and to miss the total amount. If you borrow £3000, for example, how much is the total repayment going to be? If a lender tells you that your monthly repayment will be £100 a month for 5 years and then throws a load of numbers and terms at you, you’d be forgiven for thinking all was well. But when you really add that up, that’s £6000 total repayment! Twice what you borrowed! It’s imperative that you have an exact figure in front of you for what, exactly, you will repay in total.
Signing credit agreements or loan agreements is a big deal. Don’t put pen to paper until you know exactly what the terms are in clear and plain English.
Why Access Your Credit Record?
With ever growing concern about identity theft and fraud and the ease with which credit is available, checking your credit record should be something you do frequently. However, most of us don’t think to even check unless we’re turned down for credit somewhere and we’re not sure why.
One thing worth keeping in mind is that if you have been turned down for credit, you are within your right to ask the lender which agencies provided information about you. However, even if you have not applied for credit, you’re still perfectly within your right to contact agencies and ask to see your record. As I mentioned, this is something worth doing just to make sure that you are happy that everything on file about you is correct.
Accessing Your Credit Record
There are three main credit agencies in the UK who provide information on your credit history to lenders. They are:-
PO Box 491
Leeds LS3 1WZ
Telephone: 0870 060 1414
Consumer Help Service
PO Box 8000
Nottingham NG1 5GX
Telephone: 0870 241 6212
PO Box 1140
Telephone: 0870 514 3700
You can write to the agencies to ask for the credit file they have on you at any time at all. With Experian and Equifax, you can also order a copy of your credit record online or by telephone. In order to obtain a copy of your record, you will have to:
- Write to the agency (or all of them if applicable).
- Enclose a fee, which starts at £2 but varies agency to agency. Check beforehand.
- Include the addresses at which you have lived for the past 6 years.
- Provide your full name, date of birth and current address.
The credit agencies are then obliged, by law:
- To respond to you within 7 working days.
- Respond within this time either with a request for further information if they require it, to inform you that they have no file on you or, if none of the above apply, to send you the file.
Accessing your credit record is that simple. If you find information on there that is inaccurate, you should write back to the agency and to the institution that provided the agency with the incorrect information.
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.
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.