British consumers planning to use credit cards to fund Christmas shopping this year are being advised to be cautious, following research by the Co-Operative Electrical.
The firm found that almost a third of respondents aged between 25 – 34 planned to use credit cards to fund the Christmas period should they be rejected for an overdraft.
One finance advisor suggested that individuals need to consider the risk associated with mounting up credit card debt, especially if they are looking to make a number of smaller payments over a period of time as interest will increase month-on-month. She added:
“It’s obviously going to work out to be very expensive and you’re going to end up paying quite a lot of money in interest.”
CreditWindow urges people to carefully control their credit card spending over the Christmas period. It could prove to be a costly mistake should personal debt spiral out of control.
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The unprecedented rise of cash4gold companies throughout the UK has pushed up the levels of crime, according to a number of MPs.
The MPs expressed their concern at the increasing popularity of pawnbrokers and cash for gold shops offering to buy gold and silver jewellery, and they believe that it is leading to a rise in burglaries.
Following the severe impact the Global recession had on the UK more and more consumers are looking to sell unwanted or broken jewllery to cash for gold smelting firms and pawn brokers to raise some badly needed funds. Many people are struggling to get credit cards, loans or mortgages in the current economic climate so many are turning to other forms of finance.
Unfortunately it appears that this has resulted in an increase in burglaries as thieves attempt to cash in on this boom period for the industry.
Katy Clark, Labour Party MP, has called upon the Government to introduce tougher regulations for the industry to help reduce the “resulting crime.”
Ms Clark commented:
“I call on the Government to work closely with trading standards departments and to introduce tighter regulations on cash for gold businesses in order to bring about a reduction in resulting crime.”
The latest forecasts for the UK’s economy has indicated that the country has bounced back from recession and avoided a double-dip. With the Bank of England promising to keep interest rates low, this has come as a blessing to many people looking to borrow mortgage loans or credit cards but are likely to be an ongoing burden for investors and those hoping to save money.
Economic forecasters are suggesting that the economy will grow by around 1.4% this year and by a further 2.2% over the course of next year.
In spite of this, the Ernst & Young ITEM Club has suggested that Britain is expected to experience a “soft patch” over the winter months as the recovery’s pace loses it’s momentum.
Peter Spencer, Chief Economic Advisor for the club, commented:
“The economy is likely to slow over the winter following a surprisingly positive first half of the year but I think this will be a soft-patch, not a double-dip.”
Mr Spencer went on to say that the UK will probably have to wait until late 2011 before experiencing any significan economic improvement. However, he added that with rising unemployment, low wage growth and high levels of inflation the average British household is in for a tough ride.
The club went on to state that interest rates are unlikely to go up until 2014 which is inevitably good news for borrowers looking for mortgages, personal loans or credit cards. However, this isn’t good news for consumers looking to save money as interest rates on savings accounts will remain low.
A recent survey by Fellowes indicated that British businesses and consumers are simply not doing enough to prevent identity fraud.
The survey was carried out to mark the begining of National Identity Fraud Prevention Week (NIDFPW) and showed that 94% of Brits believe they could be at risk from identity fraud, however, only 44% regularly check their credit card statement and bills against receipts.
The study also showed that a mere 7% of consumers consumers are confident that the businesses they are dealing with are treating their data with due dilligence.
According to the UK’s Fraud Prevention Service, CIFAS, identity fraud levels were up by around 10% in the first three quarters of 2010 compared to the same period last year.
Most disturbingly, only 56% of British companies have a comprehensive policy to help protect people’s identities.
People are being urged to regularly check their credit reports and keep an eye on spending on their credit cards and bank accounts. If something looks out of place – get it investigated ASAP!
Increased spending on the high street in August is a good sign that confidence amongst consumer in the British economy is on the rise.
Despite this the increasing use of credit cards as a form of payment has raised concerns that UK debt problems could escalate if it’s not controlled, the BarclayCard Spending Index has suggested.
The report showed that credit card spending was more than 9% higher than what was spent the same time last year. This now makes it a fourth consecutive month that credit card spending has increased.
Managing Director of Playplan, John Fairhust, commented:
“We would be the last to pour cold water on a high street spending recovery but as a responsible advisor, we warn people to be realistic about their finances, the wider economy, and the possible impact this may have in the coming months.”
Mr Fairhust went on to urge consumers to use their credit cards wisely and only when they have money in their account to cover the spend.
Should consumers find themselves in debt due to excessive credit card spending, expesnive loans and spiralling debt then CreditWindow urges them to seek debt consolidation and debt management advice.
Payday loans are once again in the public eye following research by market analyst Datamonitor that showed that British consumers are becoming more reliant on payday loans to help see them through the month.
The research indicated that last year a whopping total of £1.2 billion worth of Payday loans were borrowed. Datamonitor predicts that lending is likely to soar to as much as £3.5 billion by 2014.
This predicted increase is thought to be driven by the economic slump and the erratic changes in employment. An analyst for Datamonitor, Daoud Fakhri, commented:
“There has been an increase in the number of people working part-time and by the hour which has meant that there’s been a greater fluctuation in pay, leading to cashflow problems for many consumers.”
Mr Fakhri added that with Employers facing increasing economic pressure it’s likely that this employment trend is highly likely to continue for the next few years.
With these worrying trends it appears that payday loans are becoming a much more popular source of credit for people who require “quick fixes” to see them through to payday.
UK Highstreet banks have announced plans to legally challenge new laws that govern the way they must handle complaints regarding payment protection insurance (PPIs).
PPI essentially covers credit card or personal loan debt repayments should the borrower prove unable to carry on repayments due to an accident, illness or even if they are made redundant from their job.
PPI has faced major criticism after research indicated that PPI had been mis-sold to a large number of customers who would never be able to claim on it. Many other consumers have been made to feel pressurised into taking out payment protection alongside loans or credit cards.
The British Bankers’ Association (BBA) has asked the High Court to review the Financial Service Authority’s (FSA) rules on PPI complaint handling. These rules are due to come into force by the end of 2010.
Not only do the rules give clear guidance on the way financial firms, including banks, are to handle PPI complaints but also states that customers who believe they were mis-sold PPIs are to receive compensation.
It’s believed that the BBA’s biggest objection to the FSA’s new regulations is related to retrospective credit and loan PPI sales that took place before the new guidance was introduced.
In spite of this the FSA have stated that they expect financial firms and banks to continue handling PPI complaints whilst the review is taking place.
The Chief Executive of consumer group Which, Peter Vicary-Smith, commented:
“Not content with the billions they have made from this over-priced, flawed and frequently mis-sold product, the banks now seem to be trying to wriggle out of implementing changes that would ensure consumers are treated fairly.”
Recent reports show that growth in credit card spending has slowed to it’s lowest rate over the third quarter of 2010. It’s thought that this is due to consumers cutting back on non-essential and luxury items.
In spite of credit card spending dropping to it’s lowest rate this year, the report by Visa Europe also suggested that spending had grown year-on-year. The report shows that credit card spending was 7.9% higher during the last three months compared with the same period last year.
Visa have said that this is a good indication that total spending had actually recovered to pre-recession levels. However, they added that since the rate of growth was starting to flatten out it is also a clear indication that consumer spending is unlikely to play a key role in the UK’s economic recovery.
Growth in many areas have still been marginal. Items such as holidays, cinema trips, cameras and video games increased by merely 0.4% year-on-year, which is down from a rise of 7.5% over the second quarter of 2010.
On a more positive note, consumer credit card and debit card spending on clothing and footwear continued to see significant gains at 12.1%, however, this was still lower than the 17.6% increase in the first quarter of the year.