‘Demand increases for help with debt management’
September 24, 2010 at 1:31 pm
Perhaps it should come as no big surprise to learn that the recent recession has had a huge impact on people’s finances and, in many instances, their attitudes towards spending and debt.
For some, it has come as a much needed wake up call, with Mintel’s recently published report (Consumers’ Attitudes towards Debt) showing that 39% of us are now more careful about the way we spend our hard earned cash. However, for some who were previously teetering on the brink of debt, it has pushed them over the edge. Sadly, many of these people are carrying on spending as before, citing their lack of financial organisation as the reason.
Payplan, a national organisation giving free advice on debt, is now concerned that debt problems are likely to continue to rise. Last year saw a 20% increase in clients seeking help and figures so far this year bear out the fact that this is likely to rise for 2010.
Payplan issued a warning last month to consumers seeking help. If they are not careful, they could end up paying dearly for debt advice, up to £100 in fees in some cases, making it ever harder to become debt free.
Payplan and other organisations like them offer free debt plans, which are easy to set up and follow. They negotiate with creditors on their clients’ behalf and in many instances are able to freeze interest and charges, making it far easier for the client to feel in control, repaying the debt at a rate that is fully affordable for them.
‘Which? reveals true cost of current accounts’
September 17, 2010 at 3:48 pm
Like many people in the UK you probably enjoy the benefits of having a free current account. However, Which? has just released results of research which suggest free current accounts are anything but.
Which? looked at a number of factors, including the high overdraft charges, low credit interest rates and high fees on overseas spending to come to the conclusion that many people actually pay a lot more than they realise for the use of their free current accounts.
It has also highlighted the fact that it is often very difficult for customers to compare the costs of different accounts because the methods the banks use for charging are so complicated.
The area of overdrafts was highlighted by Which? as the most confusing. It compared a number of accounts, and found that if you take out an authorised overdraft to the value of £200 for six days a month, the annual cost is £185 with First Trust. However, with Coventry BS the same amount leads to no charges.
If authorised overdrafts can be expensive, unauthorised overdrafts are even worse. Which? discovered that Santander was the most expensive when it came to a regular unauthorised overdraft through paying two direct debits each month, costing the account holder £95 a month. In contrast, the Co-operative Bank was the cheapest with only £51 in charges over the year.
But even those customers who don’t run into overdrafts are at risk. Looking at the issue of overseas spending, Which? discovered that bank customers at Norwich & Peterborough who make two withdrawals of £100 and make two direct debit card payments of £50 can end up spending an extra £57 in fees, with customers of Lloyds TSB and Ulster Bank paying £56 for the same transactions.
‘General Electric to launch online bank’
September 10, 2010 at 3:47 pm
Online banks have not had a particularly great time of late. The credit crunch revealed weaknesses in many of them, and it is no surprise that not many new names have been entering the market in the last two years.
However, that could all be about to change as it is thought that General Electric is considering launching its own online bank in the UK. If it goes ahead it will become the first online bank to be launched here since the start of the credit crunch.
It will be launched by GE Capital, the financial arm of the company, and it is thought that it could arrive sometime within the next 18 months.
It would not be the first online bank that General Electric has set up. Back in July it launched GE Direkt in Germany, which is already receiving good reviews due to its favourable rates.
If it is a success it could help to improve trust in the sector which was badly hit by the credit crunch and has been facing difficulties ever since.
The online banking sector was launched a decade ago, with such well-known names as Egg and Cahoot. However, with the credit crunch came the collapse of Icesave, the Icelandic online bank, and the problems that ensued which led to new legal regulations being imposed on online banks by the FSA.
The new online bank from General Electric will probably be given the name GE Direct, and will have no limitations on the amount of investment, a 2.25% rate on savings and a full deposit guarantee.
‘Banking offers for new students’
September 3, 2010 at 12:12 pm
Many young people will be heading off to university next month and, with the array of freebies on offer from the various banks, it can be tricky deciding which to use for your student account.
We give the low-down here on how to sort out which account is right for you and how to avoid financial meltdown.
- Look beyond the free cinema tickets, discount on AA membership and free SIM cards and work out which bank will allow you to borrow money at the cheapest rate. It is a sad fact of student life that borrowing will be almost inevitable for the majority. For instance, Halifax and Barclays are your best bet if you are likely to have to borrow up to £2,000 a year.
- If you are unlikely to have to use your overdraft and plan on using the train for trips home then Nat West’s offer of a free five-year Young Person’s railcard is worth having.
- If you are one of the lucky few with cash to spare, make sure it is not left languishing in your current account but earning interest for you.
- Overdrafts are all very well and can be a cheap way of making ends meet so long as you do not exceed your authorised limit. Once you go over that limit, however, you risk being stung by interest rates as high as 30% (Equivalent Annual Rate).
- Unless you are very disciplined, forget about having a credit card. Alternatively, keep it for use only in dire emergencies. Unless you are able to pay off the balance at the end of each month this is an expensive luxury which will eat into your budget.
- It can be useful opting for a bank which has a branch on campus. If you run into financial trouble there should be a student advisor available to help you sort out the mess.
- Set yourself a budget and stick to it. It may mean having to turn down the odd invitation to the pub and learning to cook, but ultimately you will be glad you did.
- Make sure you get your application in for your Tuition Fee loan and Maintenance Loan if you have not already done so.
