DebtBytes UK - Bankruptcy, Insolvency, Simple IVA & Bank Charges News UK http://myvesta.org.uk/blog/export.xml UK IVA and bankruptcy focused insolvency advice column for people that are dealing with problem debt, money troubles or falling behind on the bills. This advice column will provide you with information you can use. For more information visit Myvesta UK at Myvesta.org.uk.

en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html New Consumer Debt Slowing Down stever@myvesta.org 113649735942525984 The appetite of UK consumers for new debt has fallen to its lowest level for 11 years.

Bank of England figures show that in November, the growth rate of consumer credit - such as credit cards and bank loans - fell to just 9.8% a year.

That was the slowest growth recorded since September 1994 and a fall from the recent peak of 16.1% in 2002.

Unsecured borrowing rose in November by its smallest amount for nearly five years, at just £900m.

The Bank of England said this was mainly due to a drop in credit card spending, which it said was £0.3bn lower in November than in October.

Outstanding debt

Debt in the UK stands at £1,148bn, 83% of which is in the form of mortgages.

In 2004 the total amount of outstanding debt reached one trillion pounds for the first time, prompting widespread comment that UK consumers were borrowing far too much.

Fears that people would be unable to repay their debts seem to have been one factor behind the recent slowdown.

But there has also been a significant change in behaviour by shoppers.

Credit cards have been rapidly overtaken by debit cards as the preferred type of plastic card used by shoppers.

Debit cards now account for two-thirds of all spending on plastic.

Last year, the Association of Payment Clearing Services (APCS) predicted that by the end of 2006, spending on credit cards would fail to grow for the first time since they were introduced in the UK in the 1960s.

Mortgage approvals

Other figures from the Bank of England point to a continued pick-up in the property market this coming year.

The number of new mortgages approved, but not yet lent, rose in November to 115,000.

That was the highest monthly figure since May last year.

It was also a significant revival since the sudden slump in the property market a year ago drove down approvals to a low of 75,000 in November 2004.

The Royal Institution of Chartered Surveyors (RICS) predicts that 2006 will see the first annual rise in activity since 2002, after three consecutive years of decline.

"The renewed interest in the market is evident not only through these mortgage approval numbers, but in the number of would-be buyers making enquires as captured in the RICS housing market survey, which rose for the sixth consecutive month in November," said an RICS spokesman.

]]> 9:40 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113649735942525984 05 January 2006 05 January 2006 Debt Facts and Figures - Compiled 4th January 2006 stever@myvesta.org 113641473741826782 Total UK personal debt: At the end of November 2005 the total UK personal debt was £1,148bn. The growth rate remains strong at 10.2% for the previous 12 months which equates to an increase of ~ £100bn.

Total secured lending on homes in November 2005 was £956.3bn. This has increased 10.3% in the last 12 months.

Total consumer credit lending to individuals in November 2005 was £192.1bn. This has increased 9.8% in the last 12 months.

Total lending in November 2005 grew by £9.6bn. Secured lending grew by £8.7bn in the month and consumer credit lending grew by £0.9bn in the month.

Average household debt in the UK is approximately £7,776 (excluding mortgages) and £46,491 including mortgages.

Average owed by every UK adult is approximately £24,636 (including mortgages). This grew by £205 last month.

Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,121 per average UK adult at the end of November 2005. This figure translates into a 10% increase on the previous year's levels and a 45% increase since 2000.

Britain's personal debt is increasing by ~ £1 million every four minutes.

Christmas / New Year Season: More than two million people who used credit cards to buy last year's (2004) Christmas presents had still not managed to pay off the debt a year later at the end of 2005. A further 1.7 million shoppers only managed to pay off last year's Christmas credit card debts in November 2005.

Almost 20,000 personal insolvencies are expected in the first three months of 2006, of which 6,500 will be as a result of excessive Christmas spending, according to Grant Thornton's personal insolvency practice. The prediction comes in the wake of record numbers of personal insolvencies in 2005, which are expected to top 66,000.

We ran up debts of more than £11bn on credit cards in December 2004.

According to Experian three in four Britons admit to worrying about financial pressures during the festive season. The festive season is turning into ‘Stressmas’ as 20% of us are still paying off our Christmas up to six months later.

Whilst the celebrations and partying may be over in a few weeks a report from Virgin Credit Card found Brits take an average of three months to pay off the £13 billion festive celebrations bill they rack up each year, meaning the 12 days of Christmas in reality lasts 12 weeks.

According to Switch during the 2004 festive season we planned to spend £813 overall on presents, wrapping paper, cards, decorations, going out, food and drink. This includes £337 on presents, £100 on food and £56 on drink. The rest is spent on wrapping paper, cards and postage (£53); Christmas tree and decorations (£64); going out (£119) and travel (£84).

Between September and November each year lenders send out at least 100m unsolicited, but pre-approved credit card application forms. New cards achieve “top of the wallet” status: they are the most used cards and the most lucrative for lenders.

According to the British Retail Consortium the average family accumulates 18% of their annual borrowing in December by spending twice as much than in any other month of the year.

Plastic card / Personal Loans: Total credit card debt in November 2005 was £56.35bn.

Research by Egg Money shows that British consumers are unaware of how much they spend each month on plastic, believing they spend over £350 a month less than they actually do. This lack of understanding means Britons spend over £200 billion a year on their cards of which they are unaware.

According to the BBA the proportion of credit card balances bearing interest was 76.0% in October 2005.

The average interest rate on credit card lending is currently 15.75%, around 11 percentage points above base rate.

According to the latest annual report from APACS nearly two thirds of adults have a credit card and multiple card holding is a growing phenomenon in the UK. More than six in ten card holders held more than one card in 2004, with one in ten holding at least five.

Plastic cards in issue were 190m in 2004. This works out at an average of 4.1 plastic cards for every adult in the UK.

There are more credit cards in the UK than people according to APACS. At the end of 2004 there were 74.3m credit and charge cards in the UK compared with around 59 million people in the country.

270 plastic transactions took place every second in the UK in 2004.

Servicing Debt: Personal insolvency rates in the UK have reached an all time high. In the year to 30 Sep 2005, there were a record 43,606 bankruptcies and 16,496 Individual Voluntary Arrangements (IVAs), a common alternative to bankruptcy. The period July to September is the worst quarter on record, with an increase to 12,043 bankruptcies, up 6% on the previous quarter and 31% up on the same period last year. IVAs are up an astounding 95% on last year and saw a 26% quarter on quarter rise.

PricewaterhouseCoopers (PwC) insolvency experts looked at 80% of the IVA applications made in July 2005. 75% of the debtors put down "living beyond their means" as the main reason for being in trouble. Only 20% said they had lost their jobs or had suffered a breakdown in their marriages - two of the events traditionally assumed most likely to trigger personal insolvency.

The amount of debt owed by people who are struggling to keep up with repayments has reached a new high. The Consumer Credit Counselling Service (CCCS) said people who had been in touch asking for help with debt during the three months to the end of September owed an average of £29,000. The figure is 2.5% higher than the previous quarter, and represents the biggest increase recorded since the group first began compiling the data in 1999.

County court judgements (CCJs) against personal debtors in the first half of 2005 rose by 15% to 290,643. The most rapid rise since the same period 14 years ago.

According to the latest Department of Trade and Industry (DTI) Survey:

  • 8% of Individuals have monthly repayments on unsecured borrowing > 25% of gross income
  • 9% of Individuals have monthly repayments on secured and unsecured borrowing > 50% of gross income
  • 5% of Individuals are finding their household’s debt repayments a ‘heavy burden’
  • 4% of Individuals currently in arrears on at least one credit commitment/ domestic bill for more than 3 months

    Money is the most common cause of arguments (44%), most respondents argued about spending priorities, particularly if not working, according to Relate. Low income couples are more than twice as likely to argue over money issues than middle/high income families. Money related arguments are also more common if the couple have children under 10. More women than men were likely to argue over trust and secrecy issues related to money. Equal proportions of men and women argued about lack of money.

    A quarter of those in debt are receiving treatment for stress, depression and anxiety from their GP.

    Students / Youth: My Equifax recent survey revealed that 22-24 year olds have more short-term debts than 18-21 year olds, with 19% owing over £5,000 (only 11 per cent of 18-21 year olds owe this amount). This suggests that within the first five years of being credit active, young consumers are already building up significant debts and risking overburdening themselves.

    With university underway for this year’s intake of students, money worries seem to be at the forefront of their minds. Nearly two thirds admit that they are not prepared for the financial commitment of university compared to only 39% who have actually done some element of financial planning, according the 2005 NatWest Student Money Matters survey.

    According to the National Union of Students (NUS) the estimated average student expenditure for academic year 2005/06 (39 weeks) is £10,493 in London and £8,810 outside London.

    Pensioners: According to the Prudential one in five pensioners struggle to make ends meet. 17% of OAPs live on under £5,000 a year. A third of pensioners live on under £7,500 per year. Nearly one in five pensioners goes back to work after retiring.

    Four out of 10 of people still in work have made no pension provision whatsoever and will have to rely on the state for an income in retirement, according to a large-scale survey of British attitudes by National Centre for Social Research.

    Up to nine million old folk across the UK will struggle to pay fuel bills this winter according to Age Concern.

    One in 10 pensioners calling Age Concern, some in their 80s, is struggling to clear mortgages and pay bills such as council tax.

    Housing: According to the Office of Deputy Prime Minister the average house price in the UK in October 2005 stood at £186,755 (£194,824 in England). UK annual house price inflation rose by 2.2%. Annual house price inflation in London was - 0.2%.

    Housing data has been fairly consistent this month:

  • The Nationwide, Halifax, The Royal Institute of Chartered Surveyors (RICS), Rightmove and The Council of Mortgage Lenders (CML) all predict that house prices will rise between 2 – 4 % in 2006.

  • RICS estimate that house prices are 7.8 times earnings compared with an average of 4.9 since 1969.

  • Gross mortgage lending in November was the second highest monthly lending figure on record, 1% lower than lending in July 2004, and 30% more than the lending last
    November according to the latest figures from the Council of Mortgage Lenders.

    The average loan approval for house purchase in November was £130,800.

    Housing 1st Time Buyers: The average house price in the UK in October 2005 for first time buyers now stands at £152,331 which is an annual increase of 5.0%. This is approximately 4.2 times their average household income (In 1990 the average price paid by first time buyers was £45,000, 2.7 times their average household income).

    In the UK, the average deposit required by first time buyers in the third quarter of 2005 was 18.9% of the purchase price which equates to £28,800. This compares with just 8.8% in the second quarter of 1997.

    The National Association of Estate Agents reported that first time buyer sales dropped to 8.4% of total sales in November. This figure is considerably lower than the same time in 2004, when first timers took a 17.1% share of the market.

    High Street Spending: Parents typically spend £165,668 on raising a child from birth to the age of 21, according to friendly society Liverpool Victoria's most recent annual Cost of a Child survey. This works out at £7,889 a year and represents a rise of 7.8 per cent on last year's survey, more than three times the rate of inflation, and up 18 per cent on the 2003 survey.

    More than 30% of our food is thrown away. Each adult throws away food worth £420 every year.

    The RAC estimate the cost (including depreciation) to run a privately owned car from new for a period of three years with an annual mileage of 12,000 is £424/month for a 1201cc – 1500cc car and £627/month for a 2000cc car.

    The average wedding costs around £16,000, yet 45% of couples - some 117,000 nationwide - have no financial planning to pay for the big day, a study by stockbrokers Brewin Dolphin Securities found.

    Money Education / Financial Literacy: Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink. With rising personal debt levels in Britain, and a lack of long-term savings, better money management seems a pressing issue.

    According to Standard Life over half (57 per cent) of UK adults say they have not drawn up a will meaning they would die 'intestate'. A further 19 per cent have had a change in circumstances since drawing up their will, meaning it could now be out of date.

    Nearly four out of five people do not know that APR refers to the interest and other costs of a loan, four in ten admit they do not understand mortgages or ISAs, and a third lack confidence in their financial affairs. These are some of the results of a survey conducted recently by Mori. One in five did not understand the concept of inflation. Nearly a third did not know that insurance products are designed to protect their owners from unforeseen events. Only 30 per cent could calculate four per cent interest on £2,000 over two years.

    Savings: People saved an average of 7.2% of their income during the three months to the end of November, the highest proportion since National Savings and Investments first started the survey in September 2004.

    Building society savings increased by 25% between November 2003 and November 2005. This is perhaps evidence of the growing acceptance by people that they need to save, so they have something to fall back on in case hard times hit.

    Whilst the concept of ‘spending the kids’ inheritance’ may be nothing new, it appears that many of those in their forties or fifties are prepared to spend their own retirement funds to finance their current lifestyles. According to Insight Investment, well over a quarter of forty and fifty somethings (29 per cent) say that enjoying their money now is more of a priority than investing for the future. This ‘live for the moment’ attitude is despite well over a third (39 per cent) of those aged 45-54 admitting to having no investments other than residential property, a situation in which more than one in four (27 per cent) of the over 55s also find themselves.

    The majority of Britons would be unable to cope financially in the event of a minor household emergency according to the Alliance & Leicester. Just 28% said they had money put aside which could be used to replace household appliances, such as a cooker or fridge.

    Compiled monthly by Richard Talbot.
    ]]> 10:36 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113641473741826782 04 January 2006 04 January 2006 A New Years Resolution To Trim Down On Debt stever@myvesta.org 113637533473433776 Christmas shopping adds to financial burden in 2006

    As many individuals across the UK are developing plans to lose weight gained from overindulging on holiday treats, countless others are worried about shedding off excess debt from a season of holiday shopping. January and February are the months when bills for gifts and other holiday expenses arrive, and those bills could be a shock to many of the shoppers.

    “Many people have a set budget for their holiday shopping but end up going overboard once they get to the shopping centre,” said Steve Rhode, chairman of Myvesta UK, a financial crisis centre. “Usually that overspending ends up on credit, which can get very expensive if you don't have a solid plan to pay everything off.”

    For example, if Christmas shopping bills of £750 were paid by a credit card with an 18% interest rate and only the monthly minimum payments are made, it will take 14.5 years to pay off and cost an additional £1,181.25 in interest payments. But if a payment of £75 is made every month, it will only take 11 months to pay off the debt and cost £68.72 in interest payments.

    “The most important thing is to develop a plan to get rid of that holiday debt quickly so you’re not still paying for last year's gifts when the next holiday season comes around,” Mr Rhode said. “If you need to find some extra cash to pay down your holiday debts faster, track your spending for a month to find out where your money is going. Then you can identify places where you can cut back.”

    Information on dealing with Christmas shopping debts can be found at www.myvesta.org.uk online. The web site offers resources including publications, debt management calculators and debt discussion forums as well as online audio and video clips that discuss debt solutions.

    Consumers can also discuss their situations for free with Myvesta’s Senior Online Debt Advisors through an online chat facility at www.myvesta.org.uk or by calling free on 0800 1116 885.

    # # #

    Myvesta UK is dedicated to helping people create healthy financial lives. The organisation provides a wide range of materials and services to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit www.myvesta.org.uk
    ]]>     11:44 AM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113637533473433776     <a href="http://myvesta.org.uk">Act Now To Avoid Debt Hangover</a> stever@myvesta.org 113637042794909866 Christmas is behind us and now comes the reckoning. John Greenwood tells you how best to minimise the pain

    December's spending frenzy is over, leaving many of us with a financial headache.

    Christmas is an expensive time of year, but as 2005 came to an end several major credit card companies withdrew their table-topping deals, petrol prices were rocketing and British Gas warned its millions of customers to brace themselves for higher bills.

    You may be one of many people nursing a sore head today, but don't let the thought of soaring heating bills and spiralling minimum payment demands put a freeze on your spending this January - with a little research you can easily save hundreds of pounds. Here's some pointers for starters.

    Utility bills

    British Gas has warned consumers to brace themselves for a further major price increase in 2006, on top of rises totalling 32 per cent in the past two years, so it has never been more important to make sure you are with a cheap energy provider.

    British Gas is expected to bump up prices by a further 14 per cent, but many householders are already paying up to 20 per cent more for their energy than they need to.

    According to comparison site uSwitch, the average consumer could save £140 a year by changing provider.

    Switching gas and electricity suppliers can be done quickly and easily on the internet, by telephone or fax by contacting comparison companies such as uSwitch and SimplySwitch.

    Many providers will offer you lower rates for paying by monthly direct debit. Insulating your home and adopting other energy-saving measures can cut bills by about £250 a year for a typical home, according to the Energy Saving Trust, and just turning the thermostat down by one degree will save you £30 a year.

    Credit cards

    Spending on plastic hit a record £29 billion last month so the chances are that January's credit card statement could make unpleasant reading. Help is at hand, however.

    The same comparison companies such as uSwitch and SimplySwitch, as well as a number of financial websites can point you towards the best deals.

    Annual interest rates on credit cards average 14.7 per cent, more than 10 percentage points above the Bank of England's base rate, so switching to a card with an interest-free introductory period could help stop your debt spiralling out of control.

    For example, you will save £105 a year for every £1,000 of debt transferred from the average credit card to a 0 per cent offer. Currently, the best deal available is HSBC's Mastercard with a nine-month 0 per cent discount period.

    Halifax One Visa offers 12 months at 0 per cent for balance transfers but charges a fee of 2 per cent of balances transferred up to a maximum of £50 according to price comparison site Moneyfacts.

    When switching, always check the small print as many credit card companies charge a fee for balance transfers.

    Remember that when you use a 0 per cent balance transfer card for new purchases, any payments you make will go to reducing the original balance that you transferred. This means that new purchases will attract interest at the higher rate, so always take into account the headline rate on the card as well as the discount offer.

    Once you have switched to a cheaper deal, work out a clear strategy of how to pay off the outstanding credit card debt - and stick to it.

    Just because the debt is not incurring interest any more does not mean you don't have to worry about it. Running up more debt on your old card that is now full of credit and ready for action will only see you twice as much in debt a year down the line.

    A clear repayment strategy is crucial because after the offer period you will begin to be charged interest at a higher rate again and in the future you may not be able to find an alternative 0 per cent offer to shift your debt to. And don't bank on being able to switch to 0 per cent offers forever - as they become more popular, credit card companies are increasingly withdrawing offers or placing conditions on switching.

    Consolidate debts

    If you are paying exorbitant rates of interest on your credit or store cards or on an unauthorised overdraft then life can be made simpler and more affordable by combining them into a single loan.

    Consolidating debts with a cheaper personal loan will give you the benefit of lower overall repayments and the simplicity of a single, easy-to-understand payment each month.

    High street banks typically charge about 15 per cent for overdrafts so switching to a low-interest loan will save you money (you may want to consider moving bank accounts while you are at it).

    There are eight different lenders offering loans at under 6 per cent. But again, always read the small print as some companies will charge you penalties for paying the loan off early.

    Switch mortgage

    Are you still paying your lenders standard variable rate?

    If you are, you could save yourself hundreds of pounds by remortgaging - even if you may have to stump up cash for legal costs and arrangement fees to do so.

    When you switch, keep an eye out for hidden fees and consider a deal that includes free surveyor's fees. If you are tied into your existing deal, such as a fixed-rate mortgage, make a note in your diary a couple of months before it ends so you can get ready to move to a cheaper rate immediately.

    Carrying out research on the internet or speaking to a mortgage adviser will help you find the best deals. Mortgage pundits are predicting that lending rates may fall in 2006 so think twice before rushing into fixed-rate deals.

    Mobile phone

    Mobile phone tariffs advertised by the main service providers such as Orange, Vodafone and O2 are not always the cheapest. Better deals can often be found through online retailers such as onestopphoneshop.co.uk (part of the Carphone Warehouse) and mobiles.co.uk if you are prepared to claim back discounts after three or four-month intervals.

    If this is too much hassle then haggling with your current supplier may get you better terms as customer services staff have some flexibility to give you extras.

    Either way, apathy is guaranteed to cost you money and switching providers is now easier as you have the right to take your telephone number to the new company.

    Money Telegraph
    ]]>     10:06 AM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113637042794909866     Can We Pay Our Bills? stever@myvesta.org 113631961728864236 Britain is up to its eyes in debt and 2006 could be the year we all feel the pinch

    First, the good news. If you are a multi-million pound lottery winner, or a member of that small band of City executives and senior business people who get to write their own salary and bonus cheques, 2006 will be a very good year indeed. Another small group of professionals - the insolvency accountants - can also look forward to the New Year with a rosy glow, but that is all part of the problem.
    The bad news is that the rest of us - say 99.99 per cent of the population - can only look forward to a year of financial belt-tightening and uncertainty. The economic omens for 2006 are more depressing than at the start of any year so far this century.

    This is especially the case in Britain, though in the age of globalisation, no country is an island in the great economic ocean, and our prospects have to be seen against the background of world economic forces. Here, too, the auguries are not favourable.

    The biggest economy in the world - the United States - is still marching relentlessly on, using the all-conquering dollar to buy what it wants from the rest of the world. But there is a growing fear that Uncle Sam has been living beyond his means for too long and the reckoning cannot be postponed for much longer.

    The problem is that America's global spending spree has been financed largely by borrowing. Under George W Bush, the national debt has grown enormously, with the USA owing foreign governments and banks around $8 trillion - that's eight followed by 12 zeros, making it rather a large amount of cash.

    The American consumer, characterised in the transatlantic psyche as Johnny Sixpack, has done his patriotic duty to keep the economy turning over nicely, but he has done it on tick. The national motto, 'In God we trust; all others pay cash', has been meaningless throughout the 21st century.

    The people who have lent that money are, mainly, Asian governments and financial institutions. For the time being, that is good news for America and the rest of the world. With Japan coming out of a long period of recession, and the Chinese economy growing at a vertiginous rate, they are not likely to want their money back any time soon.

    But one day, the chickens will come home to roost - maybe not in 2006, but the fear is always there.

    What has this got to do with us, as we contemplate the post-festive season reckoning? Well, our personal finances are increasingly a microcosm of the American and the global situation. We have kept the recessionary wolf away from the door for five years now, but we have largely borrowed to do it.

    The dynamics of Britain's consumer-driven economy are similar to Johnny Sixpack's. As we manufacture less at home but still want the glitter and glamour of consumerism, we have taken to debt as the natural way to finance our spending addiction. Total borrowing in Britain topped £1 trillion last year, just a bit under £5,000 for every man, woman and child in the country.

    Now, five grand may not seem a big sum, and most of us would be able to handle that amount of indebtedness, but look at it a different way. Personal debt per household has soared over the past 20 years, from around 80 per cent of household income to the present level of 150 per cent. It has been rising throughout the 21st century as banks have been aggressively pushing their financial products, mainly credit cards and loans. We have been only too ready to take up their generous offers.

    Increasingly, some people have been unable to handle it. In the coming year, there will be something like 20,000 personal insolvencies, the highest number since records began in the 1960s. It used to be that insolvency followed on from the failure of a family business venture, but these days, it is increasingly high levels of personal indebtedness that triggers the plug-pulling.

    This government has rightly, I would say, taken much of the shame out of bankruptcy, on the grounds that risk-taking entrepreneurs would be deterred from starting up wealth-creating businesses if they were faced with the life-long shame of Carey Street.

    But the intention of that was certainly not to allow people to build up huge levels of personal debts, on which they could then renege in a relatively painless bankruptcy.

    There is much muttering among the big banks which provide all this credit that guidelines will have to be tightened to prevent this spiral getting out of control, but in many cases it is too late. Consumer organisations regularly see individuals with £100,000 of personal debt through loans and credit cards, with one case involving a couple who had built up £350,000 in plastic debt.

    The future is certainly not all doom and gloom, though. There is a great comfort factor at work in the form of bricks and mortar. The reason so many people feel sanguine about running up huge bills on their flexible friends is because so many of have substantial capital, acting as security, in the form of their homes.

    Property prices have enjoyed years of steady growth, and if they are now on some kind of plateau for the foreseeable future, as most experts agree, it is nowhere near the negative-equity days of the last serious recession in the early Nineties.

    So should we be worried? The problem is the sheer interdependency of the modern consumer economy. Growth is dependent as never before on our willingness to go to the shops and spend, which, in turn, is reliant on the feelgood factor of historically high property prices. High levels of disposable income - or credit - keep the economic wheels turning, but what happens when one of them falls off?

    This is the background against which to see the full import of November's solemn pre-budget review. Chancellor Gordon Brown was forced to admit that he had got the sums wrong on growth, and that the economy would have to make do with less than 2 per cent annual growth, rather than the 3 per cent plus that he had hitherto been expecting. It was a chilling admission, but we will only see how chilling in 2006.

    Lower growth will mean employment levels in the doldrums, falling consumer confidence and declining real wages. And, crucially, it will mean a lower tax take for the Treasury. The Chancellor has been able to avoid increases in headline income tax, but 2006 may be the year he has to bite that bullet, especially with his ambitious plans for public-sector spending.

    Higher taxes lead to lower disposable income, falling consumer confidence, and declining growth; the virtuous cycle of consumerism could easily turn into a vicious spiral of economic decline.

    There is one instrument the government has at its disposal that might head off this gloomy scenario - interest rates. Ever since Brown (in his first act as Chancellor) set free the Bank of England, it has been more worried about inflation than consumer confidence, largely because of rising energy prices. But this may change. A cut in rates would reduce debt worries and give the property market a boost.

    The Chancellor, and the British consumer, may both be relying on the Bank of England to generate a happy New Year.

    Frank Kane
    Sunday January 1, 2006
    The Observer
    ]]>     8:18 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113631961728864236 03 January 2006 03 January 2006     Debt Companies Selling Loans Face Crackdown stever@myvesta.org 113629302411335855 Unscrupulous lenders that offer high-interest loans to people who find it difficult to borrow money could soon be bound by tough new rules.

    The Insolvency Practitioners' Association, which represents liquidators and administrators, is lobbying the Government for the right to crack down on loan sharks.

    It wants to set up a separate body which would issue kite-marks to reputable lenders. "The industry approached us and asked us to regulate it," said Louise Verrill, the president of the IPA.

    The IPA also wants to force lenders to give proper advice to the people who call their hotlines.

    Jo Newman, a consultant who investigated the industry for the IPA, said lenders did not ask enough questions about borrowers' financial situations. "They tend to ask: Do you want a loan or do you not want a loan?". He added the initiative would have "virtually no cost" for the Government.

    However, the Department of Trade and Industry, although initially receptive, is stalling over the proposals. The IPA met the DTI just after the pre-Budget report in December, and is now seeking another meeting with Gerry Sutcliffe, the consumer minister.

    There are now around 600 companies - outside of the mainstream banks - that work in the multi-billion-pound debt industry. They range from aggressive, doorstep debt collectors to companies that manage overwhelming debts for a fee, such as Baines and Ernst.

    Loan brokers such as Ocean Finance advertise during the racing programme on Channel Four and target people with poor credit ratings. The company says it puts customers in touch with 18 different lenders, all with their own lending criteria.

    Paul Newey, the co-founder of Ocean Finance, has put the company up for sale at around £250m. Mr Newey famously forced Stanley Leisure to issue a profits warning after he won £3m at a casino in Birmingham. He lost almost all the money shortly afterwards.

    Mr Newman said Ocean Finance had confirmed it would welcome the IPA's intervention in the industry. Yesterday, Ocean Finance could not be reached for comment.

    As Britain begins to struggle with its £1,000billion mountain of debt, the debt sector has flourished. Roughly 2m people a year are calling debt management companies.

    Mr Newman said the public sector is unable to cope with the number of distressed borrowers. "The chief executive of the National Debtline told me he was swamped, and that they were only reaching a third of the calls before they rang out," said Mr Newman.

    Personal debt per household has soared over the past 20 years, from around 80pc of household income to 150pc. Around 20,000 people are expected to file for insolvency this year.

    At present, the loan companies are only bound by the Consumer Credit Act 1974. This is in the process of being updated, but currently offers scant protection to people who are faced with a tempting array of loans, and gives little power to the Office of Fair Trading. The Financial Services Authority only regulates firms that issue mortgages of more than £25,000.

    Banks are also facing curbs on the way they sell credit cards and loans after the Banking Code Standards Board expressed concern. The body said it was not sure banks were making certain customers could afford repayments before they were given more credit.

    The board also said it was worried about debt consolidation companies that did not talk to borrowers about their ability to take on further debts.

    For confidential debt advice contact the Not For Profit Group Myvesta UK on 0800 1116 885
    ]]>     12:53 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113629302411335855     Switch Gas & Electricity Suppliers To Avoid Price Increase stever@myvesta.org 113629205744420063 Many families can easily make big savings on power, as Stephen Ellis did

    About 8.4 million families will be paying more for their gas and electricity from tomorrow when the latest price hikes from Npower and Scottish & Southern take effect.

    Look into it: switching power suppliers is easy
    Further increases look likely during the rest of 2006, following a warning from British Gas. It raised prices by around 33pc during the past 18 months and a further increase of 15pc is slated over the next year. That is why you should make a New Year resolution to regularly check you are getting the best deal available and switch any time you could make a saving.

    I switched suppliers soon after moving into my present home two years ago. A check recently showed I could save nearly £12 a month - or more than 16pc - by transferring my business. The figure was even higher if I opted for a different supplier for gas and electricity. It took me around 10 minutes online using the simplyswitch.com service and I am now signed up with London Energy and have dumped my previous supplier, Scottish Power.

    But you do not even need to have a computer to benefit from the service, as it is available on the phone.

    Karen Darby, chief executive of Simply Switch, said: "We accept that a lot of people either do not have access to computers or do not feel confident to carry out this sort of transaction online. So we have one of the largest dedicated call centres in this country specifically to help people who would rather talk to someone about this. We are totally independent of the suppliers and, although we do get a small fee from the suppliers when someone switches, it is the same fee for each of the companies."

    Whether you are using the phone or a computer, you will need your postcode, the name of your current supplier, how you pay the bill and either the approximate cost over the past year or the amount of energy you use in kilowatt hours. These figures are printed on bills.

    Ms Darby added: "Some people have stuck with British Gas for their gas and the local power company for their electricity but that probably means they are paying the highest possible price. A few people are worried about what will happen if there are electricity or gas supply problems. In fact those arrangements do not change no matter who bills you for your supply."

    With prices from all suppliers likely to rise over the next year it may well be worth considering a fixed-price deal, though you should watch for penalties to stop you switching within the period of the deal. Four main providers offer fixed-price contracts: British Gas, EDF Energy, Powergen and Scottish Power. Only British Gas imposes exit penalties but its price is guaranteed until the end of October 2010. Powergen is the only one offering a "capped" deal where prices will not go up but can come down. In most cases you will pay only a 3 to 5pc premium on current prices.

    Ms Darby said: "These deals are getting increasingly popular and could well provide a saving over the full term of the deal." Firms offer better deals or discounts if you pay monthly by direct debit rather than being billed quarterly. Agreeing to a paperless system - where you access bills on-line - can provide a further saving. Paul Schofield, utilities manager at moneysupermarket.com, suggests further savings could be made by switching to a dual-fuel deal where you get gas and electricity from the same supplier.

    He explained: "A customer switching to a dual-fuel deal with London Energy - part of EDF Energy - could see annual savings of as much as 23pc, or £226.17 for an average customer, provided they were happy being billed online and paid by monthly direct debit."

    Mervyn Kohler of Help the Aged noted: "Lots of families are getting together over the New Year period and that is the ideal time when younger members can help older relatives to search out a cheaper energy supplier."

    www.simplyswitch.com or telephone 0800 781 1212
    www.uswitch.com or telephone 0800 093 0607
    www.which.co.uk/switch
    Tips for switching Þ

    Have the past year’s gas and electricity bills to hand before contacting a switching company.
    Agreeing to pay by direct debit can knock around 10 per cent off your bill.
    Using internet-only services that don’t use paper bills can save three per cent to for per cent.

    Do not sign up on the doorstep on the basis of what you are told by a salesman.
    When you switch keep a note of the basis for the quote so you can check you get the deal you wanted.

    If you are comparing a quote with what you paid previously make sure they are on the same basis – for example, they should both include VAT.
    Companies only have to read meters once every two years, so it makes sense to supply your own readings rather than accept estimates.
    ]]>     12:35 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113629205744420063     Don't Miss The Tax Return Deadline ! stever@myvesta.org 113627892196360146 LONDON (Citywire) - The 10 million individuals who have to complete a tax return may find the New Year starting with a 100 pound fine if they fail to complete their return within the next 28 days.

    But while you are wrestling with the details of filling in the forms and worrying about how to pay the tax man and the credit card debts, spare a thought for the poor accountants who burn the midnight oil throughout January in an attempt to deal with the millions of taxpayers who leave things until the last minute.

    Last year some 38 percent of all tax returns or 3.72 million returns were filed in January up against the deadline, although they had been sent out from the previous April. And in spite of the Revenue's efforts to reduce the workload on tax officials and accountants by exempting pensioners and others on low incomes from filing a return, the number of taxpayers required to complete a self-assessment return continues to rise as more individuals are dragged into the higher rate tax net.

    Some people clearly find even filling in a tax return preferable to the enforced jollity of Christmas with the family. In 2004 some 306 self assessment returns were filed online on Christmas day. And HM Revenue & Customs is about to launch blitz advertising to persuade us all to comply by the due date, January 31.

    This will include telephoning as many as 350,000 taxpayers who have yet to file. Presumably these are the delinquent taxpayers, whom the Revenue suspects of owing considerable sums, with a bad track record of paying up on time.

    In spite of a mandatory fine of 100 pounds for not filing on time, plus interest penalties on tax due, an estimated 10 percent of all taxpayers miss the deadline and incur penalties. Last year some 900,000 of the 9.8 million taxpayers obliged to file returns had to pay the 100 pound fine.

    The taxman is keen to encourage more of us to file online too. By December 16 the Revenue received over 900,000 online returns over the Internet, an increase of 30 percent on last year.

    More than 9.8 million self assessment tax returns were issued in the last tax year, and almost 1.3 million were completed online. "We have always recommended that people file early and outside the busiest periods - and we are pleased to see that some taxpayers have taken this to heart, even at Christmas," says Roy Massingale, director of self assessment at HM Revenue & Customs.

    He maintains that "Filing online is an easy, convenient and secure way to submit your tax return - all you need is an activation PIN number. This can take a few days to process, so register as soon as possible to beat the 31 January deadline." Last year the government website crashed as thousands of individuals tried to file at the last minute. People needing help or more information can visit http://www.hmrc.gov.uk, or telephone the self assessment helpline on 0845 900 0444.
    ]]>     9:01 AM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113627892196360146     Bankruptcy Now A Lifestyle Choice stever@myvesta.org 113627864589128733 Declaring bankruptcy is now nothing more than a lifestyle choice, accountants said as Government figures showed a rise of almost 40 per cent in the number of personal insolvencies.

    The Department of Trade and Industry said 15,394 people went bankrupt between April and June, a 12 per cent increase on the first three months of the year, and a 37 per cent rise on the same period last year.

    Credit card borrowing in Britain now stands at £34 billion
    So far this year, more than 40,000 people in England and Wales have declared themselves bankrupt - the highest total for a half-year since records began in 1960.

    Much of the blame lies on the £1,000 billion that consumers have borrowed to fund an "unsustainable champagne lifestyle", according to Mike Gerrard, an insolvency expert. "The mountain of personal debt has no peak in sight", while "excessive credit and store card use" continued, he said.

    Other accountants forecast that the number of bankruptcies would double this year. Several high street banks have given warning that they may have lent too much money too carelessly. Barclays was the latest bank to say that it had increased the amount of money it sets aside to pay for bad debts, by 20 per cent to £706 million.

    The bank said profits at its consumer banking business had fallen, and that Barclaycard, its credit card arm, had seen a 17 per cent fall in its revenues to £379 million as consumers began to rein in their spending.

    Credit card borrowing now stands at £34 billion, but there are increasing signs that people are choosing to save more. In April, borrowers repaid £40 million on their cards in total.

    Stephen Grant, a partner at the accountants Wilkins Kennedy, said the huge rise in the number of bankruptcies was because the Government had removed much of the stigma of the process.

    "Much of the pain and shame of a bankruptcy has gone," he said.

    "The change has encouraged some people to view the process as more of a lifestyle choice than a last resort."

    Mr Grant said an increasing number of young people, such as graduates with significant student loans, felt that they had nothing to lose by building up and writing off debts.

    Last year, a change in the law under the Enterprise Act reduced the bankruptcy term from three years to one. The change was designed by Peter Mandelson, when he was trade secretary, in order to help entrepreneurs quickly get back on their feet.

    Since the Act was passed, there has been an almost exponentially steep rise in the number of applicants for bankruptcy. It is now possible to fill in the necessary forms on the internet, without having to engage lawyers or accountants.

    The bankruptcy figures, much like mortgage repossession figures, affect too few people to give any real information about the state of the economy. But John Butler, an economist at HSBC, said it was "worrying" that bankruptcies should be rising at a time of "high employment and low interest rates".

    There were also 3,342 company liquidations in England and Wales during the quarter, an increase of 12.5 per cent on the first three months of the year, and six per cent higher than a year ago.

    By Malcolm Moore, Economics Correspondent
    (Filed: 06/08/2005)
    ]]>     8:52 AM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113627864589128733     A Bad Year For House Prices stever@myvesta.org 113627791701802348 LONDON (Reuters) - The housing market suffered its worst year in a decade in 2005 but signs are growing that conditions are picking up after a sharp slowdown, data from the Nationwide building society showed on Friday.

    The mortgage lender said house prices rose by 0.5 percent in December, lifting the annual rate to 3.0 percent from 2.4 percent in November.

    That was still the weakest full-year performance since 1995 and follows several years of double-digit gains as a series of interest rate hikes took the wind out of the booming market.

    But economists said fears of a housing crash so widespread just a year ago look to have been unfounded as evidence builds that the market is gently recovering though a return to boom conditions seemed very unlikely.

    "While there is uncertainty about the economy at present we still expect he next move in interest rates will be down and that this is likely early in 2006," said Fionnuala Earley, economist at Nationwide.

    "But while the market responded quite swiftly to the rate cut in August, we do not expect a cut to cause annual house price inflation to accelerate back up to levels seen in early 2005."

    Nationwide is predicting house price rises of between 0 and 3 percent in 2006.

    Economists said the market was unlikely to tolerate any rises beyond that as affordability still remained a key constraint for many buyers.

    "If house prices start to accelerate markedly, we believe buyer interest will diminish, thereby keeping a lid on prices," said Howard Archer, economist at Global Insight.

    Nationwide said the average home cost 157,250 pounds in December, or up around 13 pounds a day over 2005. That compared with gains of almost 50 pounds a day last year.

    It also noted that this year was the first since 1999 that equity market increases had outstripped house price inflation.

    "The FTSE-100 grew by 16 percent in 2005, compared to housing market growth of 3 percent. But the FTSE still remains 10 percent below its 1999 level, whereas house prices are more than twice as high as than at the end of 1999," Earley said.
    ]]>     8:44 AM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113627791701802348     Individual Voluntary Arrangement (IVA) - The Bankruptcy Alternative stever@myvesta.org 113623194687954966 It's impossible to ignore the dark debt clouds gathering over UK consumers.

    Thanks in part to the explosion in cheap credit, low interest rates and continuing failure of banks to share financial data, greater numbers of Britons have been getting hopelessly into debt.

    Eighteen months ago, new rules were introduced allowing bankrupts to be discharged within just one year (rather than three, as before). Since then, more people than ever before have declared themselves bankrupt.

    Around 80 per cent of personal bankruptcy cases now come from individuals who put themselves into bankruptcy, instead of being forced to do so by their creditors. According to figures from the Department of Trade and Industry, the three-month period from July to September this year was the worst quarter for personal insolvency on record, with 11,195 bankruptcies. Figures are up by 31 per cent on the same period last year.

    Older consumers who have traditionally shunned debts will find this statistic shocking. But for many young graduates conditioned to expect a £12,000 debt on leaving university, bankruptcy represents a path to financial freedom.

    "In April 2004, [part] of the Enterprise Act 2002 came into force, making it possible for a bankrupt to be discharged within a year," explains Danny Davis, head of the insolvency group at the law firm Mishcon de Reya. "This [has] led to a lot of people, particularly young people in their late 20s and early 30s, choosing to clear massive debts - credit cards and loans mostly - by declaring themselves bankrupt."

    If you're not a homeowner and have no significant personal assets, then bankruptcy now makes it relatively easy to walk away from your debts.

    Steve Treharne, head of personal insolvency at accountants KPMG says: "There are probably some young and irresponsible people who view bankruptcy as an easy option, but for the majority of people it is the solution to a problem that has become unbearable and needs to be addressed urgently."

    The risks of bankruptcy have been well highlighted. Once declared bankrupt, you have to hand over all your assets, including bank account books, insurance policies and bank statements, and stop using any credit cards or bank accounts immediately.

    You will not be able to obtain credit of £500 or more without warning the lender that you are a bankrupt - when higher rates of interest will usually be charged.

    If you are a homeowner with equity in the property you could be forced to sell your home to release money to your creditors.

    Your status as a bankrupt will also bar you from working in the financial services industry.

    The good news is that your bankruptcy will end within 12 months and you will be discharged from all your debts. Currently the average bankrupt is discharged after eight months, but their problems won't end there.

    Just as with consumer credit, getting a mortgage tends to be very difficult in these circumstances, with higher loan rates applied. Your credit reference will be marked for six years.

    If bankruptcies are rising at a worrying rate, the number of people signing up for the main alternative to bankruptcy the IVA (Individual Voluntary Arrangement)is soaring.

    In the same July to September period, 4,199 IVAs were registered - nearly double the number in the same quarter last year.
    IVAs carry less stigma than is attached to bankruptcy, but they still damage what remains of your credit status. Applicants make a formal arrangement (via a court with help from an insolvency practitioner, usually somebody who works for an accountant) with their creditors to pay a set proportion of their income each month.

    Debts will be frozen so that no more interest or default fees can be added to the total. The agreed monthly sum is paid into a trust and supervised by the insolvency practitioner, whose fees are deducted from the amount paid to creditors. Insolvency practitioners generally charge £75 a month, and their charges should represent no more than 40 per cent of the total paid into the trust.

    IVAs normally run for three to five years. After that, the debts are written off - even if they have not repaid them in full. But like bankruptcy, the arrangement will mark your credit reference for six years.

    IVAs are often considered a better option than an alternative known as an "informal arrangement", where you arrange to repay a "compromise" sum to creditors. This is not legally binding and your creditors could change their mind and ask you to pay everything back at a later date.

    For Mr Treharne, the surge in the number of IVAs is not a worrying trend, but rather a sign of a more responsible attitude developing among debtors.

    "People are starting to take stock of their situation and seek help in repaying their debts rather than walking away," he insists. "Most people who are in debt want to repay what they owe, and IVAs offer a manageable way to do that."

    The Government is now consulting on plans to introduce a faster, easier IVA called the SIVA, or Simple IVA. This is intended to encourage people to settle their debts and so ease their financial worries.

    Personal insolvencies are at record levels, but one woman's story offers hope for those facing bankruptcy

    Jayne Christie considered suicide as she struggled to hide her overspending and mounting debts from her husband. Now separated, she will soon be debt-free for the first time in five years.

    "I was living beyond my means, spending to add a bit of sparkle to a relationship that was going nowhere," says Jayne, 33, from Birmingham.

    She tried to save her marriage by paying for weekend breaks, romantic dinners and new clothes on credit. "I had two credit cards, a loan, an overdraft and owed money to several catalogue [companies]," she admits. "I was repaying only the minimum amount each month, and my £600-a-month salary was swallowed up by repayments, leaving me suffering severe depression. I was at rock bottom and considered suicide at one stage."

    It was Jayne's doctor who advised her to seek help from her local Citizens Advice Bureau. By that time, her debts totalled £25,000.

    "The adviser put me in touch with a debt advice company," she says. "They told me about individual voluntary arrangements [IVAs], and I'm now paying £250 a month for five years."

    Jayne will have successfully completed her IVA next month, having repaid a total of £15,000.
    ]]>     7:52 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113623194687954966 02 January 2006 02 January 2006     <a href="http://myvesta.org.uk/cashplus/">The New Cashplus Prepaid MasterCard</a> stever@myvesta.org 113623081045423129 Perhaps you have been refused a bank account, can’t get a payment card or just want a payment option that helps you control your finances? Then the Myvesta Cashplus Pre paid MasterCard is for you.

    Myvesta Cashplus is a Pay-As-You–Go Card, which means that once you load your money onto the card, you can use it to pay for almost anything, from groceries and petrol to online shopping – wherever the MasterCard brand mark is accepted.

    Unlike a credit card, as Cashplus is a reloadable prepaid card, you don’t have the worry of late payment fees or overspending. And of course, there’s no interest to pay. With the benefit of chip and PIN protection, this is the safer than cash payment option that gives you greater financial control.
    ]]>     7:37 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113623081045423129     <a href="http://myvesta.org.uk/programmes/allpaid.html">Managing your money effectively</a> stever@myvesta.org 113622966056153905 Do you dream of having more cash?
    The key to effective money management is time. The more time you are prepared to invest in managing your affairs the greater the return on that investment.
    It therefore follows that the earlier you start managing your own money the more effective the process becomes. Too many people start that process too late in life. So rather than managing their money they end up trying to manage on the money they have.

    In essence, any money management programme is designed to answer four questions: What are your financial goals? When do you want to achieve them? What funds do you have available? And what risks are you prepared to take to reach your targets?

    The answer to the first question should be more extensive than most imagine. Having somewhere to live may appear an essential rather than a financial goal.

    Yet buying a house is the single biggest financial transaction most people undertake. How much is invested in a property will have significant implications for any money management programme.

    Lifestyle questions

    Identifying financial goals will also lead people to answer lifestyle questions. If a luxury holiday is an essential part of life then there will be less cash available for savings and investment. Sound money management does not prevent you from going on holiday it merely sets priorities and puts a cost on your choices.

    Key money questions
    What are your financial aims?
    When do you want to achieve them?
    What money do you have?
    What risks can you take?

    Once the goals are set then timing questions must be addressed. Retirement is an obvious issue but when do you want to quit work? What about current liabilities and commitments? As you peer into the future your funding timeline will emerge and you can begin to assess your savings and investment needs.

    How successful you will be at meeting those timing goals will depend on how much surplus cash there is once you have met your day-to-day living expenses. The free cash is available for financial planning. But do not forget your existing assets and liabilities. These could be reorganised, refinanced or even sold to liberate funds, or reduce expenses.

    Investing spare cash

    Once the surplus cash has been identified then you must decide where to invest. That will require specific advice but before seeking counsel it is important that you establish your own risk profile. The more risk you are prepared to take with your investment cash the greater the reward. There is an important balance to strike.

    Having answered the questions and set in place your money management plan it is essential to monitor and review progress. Perhaps your day-today expenses budget was too restrictive. Perhaps your earnings potential is higher than envisaged. Perhaps some of your goals are too ambitious.

    It all takes time but this is an investment which costs little and yields much.
    ]]>     7:19 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113622966056153905     Be Debt Smart For 2006 stever@myvesta.org 113622699885680016 LONDON (Reuters) - Britons should make it their New Year's resolution to cut up expensive store cards and switch loans, overdrafts and other card debts to cheaper alternatives, financial experts said on Friday.

    Price comparison Web site Moneyfacts said thousands of consumers paid over the odds for their borrowing whilst at the same time receiving "measly returns" on savings and current account credit balances.

    "The lethargic stance taken by people who are prepared to stay loyal to a financial provider no matter how poor the deal they are getting can prove an expensive mistake," said Moneyfacts spokesman Andrew Haggar in a statement.

    The difference in interest paid by mainstream providers on their instant access savings accounts could vary be as much as 4.16 percent, Haggar said, meaning that an investor with 2,000 pounds in savings could earn 100 pounds more each year in interest simply by switching provider.

    Nationwide Building Society said the first step for anyone looking to overhaul their finances in the New Year was to pay off and cut up any store cards.

    Store cards offered by Burton, Oasis, Toys R Us and BHS each charged an annual rate of at least 29 percent. Either paying off those debts first, or switching them to a cheaper credit card could save hundreds of pounds.

    Nationwide chief executive Stuart Bernau said even those who did not have store cards could still making savings by listing all their debts and tackling the most expensive first.

    "Many people's finances are stretched after Christmas so the New Year is the perfect time to look to make savings," he said.

    However, applying for cheaper credit was not necessarily a straightforward process, Stuart Glendinning of financial comparison site Moneysupermarket said.

    Ninety-three percent of loan providers advertised "typical" loan rates that were not available to everyone, he said.

    Borrowers who applied for such loans but subsequently didn't accept them because they didn't offer the best rate, could also be adversely affecting their credit rating, reducing their chances of getting a good deal in the future.

    "Consumers would be wise to check they will benefit from a good rate before switching debts over," Glendinning said.

    Consumers with credit card balances and overdrafts of 5,000 pounds, all with high street banks, could save more than 600 pounds in the first year in interest payments alone by switching those debts to one of the cheaper loans on the market, he said.
    ]]>     6:31 PM Your Friends @ Myvesta.org.uk Your Friends @ Myvesta.org.uk 2006_01_01_myvestaukblog_archive.html#113622699885680016     Time To Switch Your Mortgage ? stever@myvesta.org 113622277022432469 THERE is an old joke that Christmas is so expensive you need a mortgage to pay for it, but this is not as far-fetched as it sounds. For hard-pressed homeowners paying their lender’s standard variable rate (SVR), who have also amassed credit card debt in the run-up to Christmas, helping to pay for the festivities is yet another incentive to remortgage.
    Morgan Stanley estimates that Britons spend an average of £940 in the run-up to Christmas. If most of this is on credit cards, there will also be interest to pay. This can be as much as 30 per cent on store cards, but more usually it is about 15 per cent.

    Adding credit card debt to your home loan can reduce your monthly outgoings. For instance, a debt of £5,000 on a credit card that charges

    14.9 per cent would cost £125 a month, assuming that the borrower pays the minimum of 2.5 per cent. If this debt was transferred to a mortgage that charges a lifetime tracker rate of 4.74 per cent, the monthly payments would drop to £28 and the total interest paid would be nearly £800 less over 25 years.

    Bear in mind that if the debt stayed on the credit card, the payments would gradually fall as the capital was repaid.

    Simon Tyler, of Chase De Vere Mortgage Management, the broker, says: “Even in the worst-case scenario, it would be cheaper both in the short term and the long term to add the credit card debt to your mortgage — though clearly it would be better to overpay to reduce that extra debt as quickly as possible.”

    But bear in mind that there are risks and you should exercise caution before you transfer unsecured debt to a debt secured on your home.

    Ray Boulger, of John Charcol, another broker, says: “It can be a sensible option for credit card users who pay off their debt in full each month, but serial abusers of credit facilities should not see it as a soft option. They will still need to exercise discipline to meet their monthly payments.”

    If all you want to do is reduce your monthly costs, Mr Boulger suggests simply switching to a lower mortgage rate and using the savings to pay off credit card debt.

    You should also consider why you need to consolidate. If you face a one-off loss of income, perhaps because you are having a baby or are temporarily unemployed, there is less danger of future problems.

    But Mr Boulger adds: “If you are remortgaging because you cannot meet your existing mortgage payments, then you will need to budget very carefully, or maybe extend the mortgage term, to avoid the risk of an impaired credit record.”

    James Cotton, of London & Country Mortgages, another broker, recommends keeping a note in your diary of when your present deal ends. He says: “Be well prepared and start arranging a new mortgage a couple of months before your deal, and any early repayment charges (ERCs), finish.”

    Even if you do not have Christmas credit card debts, remortgaging away from an SVR still makes sense. Some borrowers may be delaying plans to remortgage because of rumours that there will be a cut in the Bank of England base rate next year. The response from brokers is to “get on with it”. Mr Boulger says: “If you wait until February, you will be paying 2 per cent over the odds for the next two months. You would probably not recoup from the rate drop the money that you lost over that period. If you switched to a variable rate, you would benefit from a rate cut anyway.”

    Don’t be put off by the costs involved in switching. On competitive deals, these pay for themselves within a few months, although this does depend on the loan size.

    Many deals are fee-free or offer incentives such as cashbacks, but the Mortgage Advice Bureau gives warning that this usually means that the fees have merely been costed into the interest rates so it may not actually be cheaper.

    Switching from a rate of 6.5 per cent to a two-year fixed-rate of 4.49 per cent from Skipton Building Society would save £183.31 a month. Mr Cotton points out that this is a saving of £2,200 a year, which is equivalent to a pay rise of £2,800 for a basic-rate taxpayer, or £3,600 if you pay higher-rate tax, because the mortgage saving is net of income

    Financial Crisis Centre Myvesta UK assert that switching mortgage products to obtain a more competitive rate is an essential component of a holistic Debt Management Strategy. The Not-For-Profit organisation offers a Mortgage Switching Service that looks for ways that individuals can maximise incomes by obtaining better deals within the marketplace.
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