Personal Finance News
Actions of credit card companies called into question
Posted 2008-05-12
Over 2.5 million credit card customers have been hit with annual fees or the threat of having their account closed, new statistics have revealed.Research from uSwitch.com has found that 1.6 million consumers have had their credit limit cut by their provider, while 1.3 million have had their account closed or been told they must pay a set charge each year.Of those surveyed, a quarter were told the decision was down to their poor credit rating and 27 per cent were not given any reason at all.More than 50 per cent of those affected were using their card on a regular basis and making the minimum payment, while 20 per cent used it habitually and paid the balance off each month.Just 16 per cent of respondents exceeded their limits or missed a repayment.Simeon Linstead, head of personal finance at the price comparison site, said that lenders should explain why customers are on the receiving end of these measures."Credit card companies who are taking action to close down or make changes to customers accounts must be completely open about how and why they have selected those customers," he said.Fool.co.uk recently stated that credit card companies should help customers through difficult times instead of placing more charges on their products....
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Overdraft charges are increased
Posted 2008-05-12
Some of the UKs banks have increased the interest rates on their current accounts, new research has found.According to Moneyfacts.co.uk some lenders have cut their rates by up to 1.75 per cent while others have increased them.Michelle Slade, analyst at the price comparison site, believes that consumers are being targeted at a time when they can least afford it. ...
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Credit Action: Adverts for loans and credit cards breach rules
Posted 2008-05-11
Some credit providers are breaching advertising standards rules with their promotions on social networking sites such as Facebook.According to debt charity Credit Action, some of the promotions being advertised do not comply with the Office of Fair Tradings rules.The concern centres on issues such as the fact that most of the offers of finance, secured against a consumers car or salary, do not include the annual percentage rate of the interest that would be charged or the name of the firm making the offer.Industry rules require companies to reveal the rate if they claim their product is better value than that of a competitor or if the advertisement offers a payment-free period.Malcolm Hurlston, the chief executive of the charity, told the Guardian that the rules must be enforced to protect customers."These are the day-to-day realities of the credit crunch - creditors thinking up new ways of offering the young and the less well-off the credit they need. We must be sure that such creative products concur with existing rules and regulations," he said.Facebook is a social networking site allowing people to contact friends and share photographs ...
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Northern Rock reports increase in arrears
Posted 2008-05-11
Northern Rock has revealed that the number of mortgages three months in arrears at the end of April rose to 0.95 per cent.The nationalised lender cited the current economic turbulence coupled with a diminishing loan book for the figure, which stood at 0.57 per cent at the end of December.Ron Sandler, executive chairman of the bank, said that it was still in line to meet its targets of repaying the loan it received from the Bank of England."We remain firmly focused on our business priorities of repaying the Government debt, releasing the guarantee arrangements and, in due course, returning Northern Rock to private ownership," he said.Part of the companys strategy to reduce its debt was to ask its customers to transfer their mortgage to another provider once it has expired, something which has been made more difficult given the current financial climate, Mr Sandler said.Northern Rock was temporarily nationalised in February, the first case of such action since the 1970s. ...
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Firstrung: Lack of affordable mortgages responsible for repossession numbers
Posted 2008-05-11
The number of people having their homes repossessed is due to the fact that there is a shortage of affordable mortgages on the market, an industry figure has claimed.Paul Holmes, operations director at Firstrung, has claimed that the recent figures released by the Ministry of Justice, showing that repossessions in the UK have increased, is due to the fact that mortgage lenders have removed many of their products from the market.This has led to people coming off their existing deals and onto packages that they cannot afford, therefore leading to them eventually losing their homes."Its simply affordability. Now people are coming off those teaser rates they are finding that their payments are ballooning by up to 25 to 35 per cent in some instances," Mr Holmes said. The MoJ recently revealed that there were 38,688 repossession claims in the first quarter of 2008, compared to 33,344 in the same period in 2007....
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Banks criticised over current account charges
Posted 2008-05-8
The Royal Bank of Scotland Group and Lloyds TSB have been criticised for increasing the charges on certain current accounts.Packaged accounts, which are those most affected by the move, charge flat monthly fees but come with a range of incentives such as free travel insurance.Lloyds has increased the monthly price for its Gold and Platinum accounts to £12 and £17 respectively, while the Royal Bank of Scotland has raised the fee for its RBS Royalties Gold and NatWest Advantage accounts to £12.95.In response to the move, Kevin Mountford, head of moneysupermarket.com, told the Daily Express that free banking could soon become a thing of the past."There is a genuine fear that we will see the end of free banking in the UK. Instead we will see pricing structures similar to those in other developed countries - fees aligned to transactions," he said.Consumers in the US and the majority of Europe have to pay for their banking services....
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Pre-retirement population concerned about their savings
Posted 2008-05-8
New research has revealed that a quarter of those facing retirement are saving no money at all in preparation for it.Additionally, over 40 per cent claim to have serious concerns over how much money they will need to survive, yet have not increased the amount they are saving, with 16 per cent of respondents having actually reduced the amount they were putting aside.Mike Rogers, group chief executive of LV, who carried out the study entitled the State of Retirement report, said the figures were gave cause for concern."Despite the well-publicised £27 billion savings gap, it is worrying that as many as a quarter of the people we surveyed are making no provision whatsoever towards their retirement," he said.Over half of the people who took part in the study also revealed that they have not yet sought any financial advice concerning their retirement.In 2006, the Birmingham Midshires Building Society calculated that the average Brit had savings of £7,500....
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MoJ figures show an increase in repossession orders
Posted 2008-05-8
New figures released by the Ministry of Justice have found that the number of repossession orders made by courts in England and Wales has risen.According to the research, the number of possession orders, considered to be the first phase in repossessions, rose to 38,688 in the first quarter of 2008, equating to an increase of 16 per cent from the same period last year.In addition, the number of repossession orders issued by the courts reached 27,530 in the first three months of the year, compared to 23,438 in the first quarter of 2007.Caroline Davey, from the housing charity Shelter, told BBC News that the banks must take a large part of the blame for the current situation, by withdrawing their 100 per cent products from the market."Those lenders have now retracted all of those mortgages. But what they havent done is put their hands in their pockets to help the many thousands of people who are struggling, having taken out mortgages they simply cant afford," she said.In 1990, the number of repossession actions reached 37,498....
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Bad news for homeowners
Posted 2008-05-7
The Bank of England (BoE) has today announced that interest rates will be held at five per cent, meaning mortgage holders are unlikely to see a reduction in their payments.Following a quarter-point reduction in April, the bank opted against slashing the base rate over fears about inflation as well as the soaring prices of oil and food.Homeowners and those looking to buy had been hoping for a reduction in the rate from the BoE as the last cut, from 5.25 per cent to five, was not passed on by most lenders.Speaking to the Guardian, Nicholas Leeming of propertyfinder.com said that action is needed by the bank in order to revitalise the housing market."The Bank of England cant afford to wait another month before it acts again. The housing market has come to a standstill but theres no shortage of buyers, just a shortage of mortgages which is now impacting the wider economy," he said.Decisions on interest rates are taken by the banks Monetary Policy Committee....
Fool.co.uk: Ask for lower interest rates
Posted 2008-05-7
Price comparison website Fool.co.uk is encouraging consumers to ask for lower rates of interest charged on credit cards.According to the site, 75 per cent of consumer debt is interest bearing and that the annual percentage rate (APR) charged by most lenders is over three times higher than the Bank of Englands (BoE) base rate of five per cent.In response to these figures, David Kuo, is urging credit card holders to confront their providers over the amount of interest they are being charged."APRs are not set in stone, and are open to negotiations. ...