Tag Archives: lending

Alternatives to Credit Cards

Credit cards are a very popular way of obtaining credit easily, however, since they largely rely on a good credit history it can prove difficult to obtain one if you have experienced debt problems in the past.

Credit cards – what alternatives are there

Fortunately there are alternatives to credit cards but just what are they and what benefits do the likes of pre-paid debit cards, logbook loans and payday loans have for people with a bad credit score?

In this article we explore exactly what these financial products offer and why they may be a better solution for you…

Pre-paid Debit Cards

What are pre-paid debit cards and what are the benefits?

Pre-paid debit cards are a very recent, popular form of paying for products and services, similar to credit cards… with a significant difference.

A pre-paid debit card looks a lot like a credit card, and gives the user the ability to purchase a range of goods and services, however, the card holder must pre-load the card with their own money. This means that there is no real risk of running into debt as it has no credit or overdraft facility.

Like credit cards, Pre-paid debit cards can be used for the following:

  1. Draw cash out at ATMs all around the Globe
  2. Shop securely and safely on the internet
  3. Make train or flight reservations
  4. Book hotel rooms
  5. Buy groceries & fuel
  6. Share money with friends and family abroad
  7. Pay bills
  8. And a range of other services…

Logbook Loans

What are the benefits of logbook loans?

Logbook loans work by using your existing car as security against the loan, whilst you enjoy the benefit of still driving it. Typically, Logbook loan providers can lend anything between £500 – £50,000 which you then have to repay over an agreed time.

Logbook loans are usually paid out on the same day that you apply, which is perfect in an emergency. Logbook Loans can be used for any purpose, including:

  • Unexpected expenses and bills
  • Fuel or an urgent supermarket shop
  • Help in starting your own business
  • And a variety of other requirements…

Payday Loans

What Are The Benefits Of Payday Loans?

Payday loans are an extremely useful alternative form of credit if you have a poor credit score.

Payday loans are a form of unsecured lending that are lent based on:

  • You are in permanent work
  • You are earning over £750 a month
  • You are paid on a monthly basis
  • That you have a valid bank account
  • You are over the age of 18

So if you are looking for alternatives to credit card funding there are plenty of other products out there and plenty of companies that will still lend to you. Just make sure you repay any debt you accumulate back in a timely manner and this will help to improve your credit score and help you to take out mortgages and credit cards with a reasonable rate of interest.

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Consumer Opinion on Debt Raises Concerns

A recent study by the life insurer, Scottish Prudent, has revealed that British consumers would have to be around £16,000 in debt before worrying that they were in serious financial trouble.

The survey goes on to show that the average respondent would not begin to concern themselves with their finances until they owed almost £16,000 on credit cards and unsecured, personal loans.

The Organisation has said that the figures are a very worrying indication of how acceptable debt has become to the majority of people around the UK. Possibly more worryingly, recent figures from the Bank of England suggest that consumers throughout Britain owed a whopping £214 million from unsecured loans, credit cards and bank overdrafts at the end of November 2010.

The Head of Marketing at Scottish Prudent, Susan Barclay, commented:

“With the UK’s national debt figure dominating the headlines, it appears this could have had an adverse affect on how the nation view their own personal finances.”

Ms Barclay went on to add that to not believe borrowers would be in a serious financial situation before reaching high debt levels of almost £16,000 is a serious concern. She went on to say that is clearly “underlines how debt has become too readily accepted in the UK.”

Banks still charging extortionate rates on overdrafts

Recent figures by the Bank of England suggests that customers are being crippled by the highest rate in overdraft charges since records began.

Financial experts throughout the UK have condemned these extortionate charges being imposed on customers who dip into the red on their bank accounts.

The figures released by the Bank of England yesterday shows that overdraft rates reached a whopping 19.09% back in October.

As a result the typical customer is actually being faced with repayments that are 38 times more than the 0.5% base rate set by the Bank of England.

Most shockingly, Lloyds, the bank that British taxpayers had to bail out back in 2008, are charging their customers 19.3% and, on top of this, requiring their customers to pay £5 per month on top of this just for the privilege of having an overdraft facility in place.

Financial expert, Andrew Hagger, commented:

“When an overdraft is unauthorised, you can understand the idea that you are charged when you go further into the red. But to ask to borrow money and then be charged these exorbitant rates is just very difficult to swallow.”

In spite of this there are a number of high street banks such as the Halifax who have realised that the charges they were previously imposing on their customers were ridiculous.

As a result a number of banks have changed the fee to a fixed charge should their customers go over-drawn. For instance, the Halifax are now charging a daily rate of £1 for being overdrawn with permission, or £5 per day on an unauthorised overdraft.

CreditWindow suggests that if you are facing these ridiculous charges on your overdraft now may be the time to switch to a different bank account. Alternatively you could consider dipping into savings or even using a credit card rather than going overdrawn and facing exorbitant charges.

Credit cards set to pay for Christmas

A recent study by ConsumerIntelligence.com shows that over half of British consumers are planning to use credit cards to meet the costs that Christmas throws at them.

A massive 55% of people have said that they plan to use their credit card to fund the Christmas period, whilst, more worryingly, a further 3% are planning to take out loans.

In contrast, only 24% of respondents are expecting to use savings to cover Christmas costs to ensure they stay in credit.

The number of people relying on credit cards or personal loans to pay for Christmas is disturbingly up on the 14% of consumers who borrowed money last year, 34% of which are still attempting to clear 2009 Christmas debt.

The Managing Director of ConsumerIntelligence.com, Ian Hughes, commented:

“Christmas is only one day in the year but the financial effects appear to last all year for a substantial number of adults.”

Mr Hughes added:

“Around 14% of adults got into debt as a result of Christmas spending last year and many are still paying for that.”

UK homeowners struggling to meet credit card and loan repayments

Debt management help may be needed by British consumers who are struggling to meet personal loan and credit card repayments, according to a survey by YouGov.

The report showed that around 1 in 6 households in the UK are experiencing difficulties with their mortgage.

A further 18% of british homeowners also reported that it is a constant struggle to meet monthly repayments on their mortgages. This is a significant rise from the 10% reported last year in 2009.

Even more worryingly, the report shows that the number of home reposessions actually represents the highest levels the UK has experienced since the mid-90s.

Campbell Robb, Chief Executive of Shelter, commented:

“Clearly this shows what a difficult year it has been for many homeowners, with thousands of people literally hanging on to their homes by the skin of their teeth.”

“With potential interest rate rises, higher unemployment and steep increases in food and fuel bills on the horizon, it seems unlikely things are about to get easier for homeowners any time soon.”

Mr Robb went on to urge the UK Government to ensure that support is offered and maintained for struggling homeowners and to ensure mortgage lenders are playing “their part too so that homeowners are not faced with the prospect of losing their homes.”

On another note, the Consumer Credit Counselling Service, have revealed that many people are turning to friend’s sofas as they have chosen to rent their property to meet their mortgage repayments.

Credit Card lending improves

Recent figures released by the Bank of England have revealed that credit card lending improved during July in the UK. Many economists believe that this indicates tentative signs in the recover of the country’s economy.

The Bank of England’s figures showed that credit card firms and banks have been more inclined to extend larger amounts of credit to consumers throughout July, with credit card lending increasing by £200 million. This is clearly a good sign for both the economy and consumers alike.

Some of the excellent offers coming out now from many credit card lenders are said to be far better than some pre-credit crunch, which many experts believe shows that banks and lenders are growing in confidence regarding debt repayments by customers.

Regardless of this many financial officials and industry groups are urging caution to credit card firms and banks in extending too much credit as they may be tempting consumers to get into even more debt as a result of some of these excellent credit cards on offer.