Insolvencies still on the increase
UK interest rates held at 0.5%
Nearly 5 million getting into debt
Holidaymakers ‘will spend seven
Insolvencies in England and Wales continued to rise in the first quarter of 2010 according to new statistics from the insolvency service.
There were 35,682 individual insolvencies in the first three months of the year 17.9% higher that the 30,253 seen in the first quarter of 2009.
Bankruptcies actually fell by 10.7% compared with a year earlier, whist individual arrangement increased by 20.1% over this time.
The statistics clearly show that debt is still a big problem for many people despite improvements in the economy as a whole.
UK interest rates held at 0.5% record low 12/5/2010
The bank of England monetary policy committee kept interest at the record low of 0.5% today a decision which had been expected.
Experts are expecting no interest rises any time soon, and certainly not as the economy continues to recover. The record low 0.5% rates will be kept on hold to boost the recovering UK economy.
Experts are predicting that interest rates will be kept low to compensate for the new government’s spending cuts, which cannot be avoided to tackle the budget deficit.
Unfortunately low interest rates don’t really help people already struggling with debt problems as they may have missed payments and incurred charges.
Nearly 5 million 'getting into debt to pay bills' 28/5/2010
Almost 5 million Britons regularly use a credit card to pay household bills, according to new research from Moneysupermarket.com.
The price comparison site also found that a further 2.5 million withdraw cash using their credit cards, potentially incurring combined charges of up to £90 million a year.
An expert at debt management company Hamilton Associates said that people should be very careful about using credit cards for things like bills.
"Ideally, we should all make sure we have enough money for bills at the start of the month and set that money aside. The fact that so many people are using credit cards suggests either that they aren’t doing this, or that they don’t have enough money to pay their bills.
"If this is the case, it’s important that the bill payer seeks debt advice as soon as they can, especially if their debt is growing."
Store Cards: 59% didn't know about interest on debt 18/5/2010
When MyVoucherCodes.co.uk asked people about the store cards they were carrying a full 59% of them said they hadn’t realised they be charges interest on the debt, but thought the card would simply let them defer payment, The Telegraph reports.
About 39% of people have a store card, according to the website: 62% of women and 34% of men.
However, the survey indicates that many people didn’t take out those cards under ideal circumstances. While 59% said they were not aware that the cards would accrue interest 42% said they felt pressurised by shop staff into taking out- and a further 19% claimed they were actually tricked and didn’t realise what it was they were signing up to after being promised a discount if they took out a card.
Today while the average interest rate on credit cards stands at 18.8% the interest charged on a store card debt can be 29%.
Farhad Farhadi of My VoucherCodes.co.uk made the following comment ‘sales staff in shops often lead customers into a false sense of security by getting them to sign up to a card, which they say will give them discount on their spend. The customer hears the word ‘discount’ and is automatically sold on the idea.
People should think carefully before signing anything as this is the sort of thing that can lead to a string of debts.
Get professional advice about debts urge Insolvency Practioners 18/6/2010
Research commissioned by R3, the insolvency trade body, reveals that more than four in ten (44%) individuals who admit struggling to pay their debts have not sought advice because they do not believe that their problem is big enough to need help.
R3 President, Stephen Law commented:
It is worrying that individuals are not seeking professional advice at the first sigs of financial difficulty because they don’t think their problems are severe enough. While it may be the case that these problems are resolved without help, there is a risk that they might snowball out of control. Professional advice does not mean immediate bankruptcy. Ir could simply result in advice on budgeting”.
R3 estimates that nearly 1 million people struggling with debt have not sought help, and the reseach found that close to 10% of individuals were reluctant to seek advice because they ere afraid of being made bankrupt.
The findings show that the stigma of admitting to ddebt problems remains as more than one in ten (14%) have not sought help because they are worried about what people would think, with (11%) concerned about the effect it will have on their families.
It is vital that people who are struggling seek professional help as soon as possible.
Holidaymakers 'will spend seven months paying back debt' 03/08/2010
Over two million holiday makers have turned to debt to pay for their holidays, according to insolvency body R3, and will spend an average of 7 months paying back.
The average borrowed comes to more than £1,000.
R3’s findings follow a number of similar reports which highlight the willingness of consumers to take on debt in order to fund holidays.
Frances Coulson, R3 Vice-President, said “That people are prepared to take on a substantial amount of debt for such a long period of time in order to afford a holiday is worrying, especially as these are still economical uncertain times. Personal insolvency hit record levels in the first quarter of this year and looks set to rise- so we are urging people not to spend more than they earn”.
An expert R3 “ A lot of people who use debt to pay for holidays are perfectly capable of paying it back, but equally there will be many people who are less confident about their ability to repay.
“It’s essential that people only borrow as much as they can comfortably pay back, and have a back-up plan in the event of financial difficulties”.
Credit card debt: good news and bad news 06/08/2010
There’s good news and bad news in the credit card market,moneysupermarket.com reports, with interest free-introductory periods lasting longer than ever, but interest rates climbing steadily.
For people carrying credit card debt, both of these factors are important when they are thinking about transferring that debt into a new card.
So they will be pleased to see the average interest free introductory period (among the top best balance transfer cards) reach a record 15.4 months. Three years ago, in July 2007, the average length was just 12.8 months, so this is quite an increase.
On the other hand, the top 24 cards now come with an average rate of 17.32% which isn’t such good news.
When it comes to purchase cards, the average interest-free period now stands at an impressive 12.2 months-again, a significant increase on the 10.8 months we saw back in July 2007.
“An interest-free balance transfer card or purchase card can be a great option for people with existing debt who need flexibility, or for those who have a big purchase coming up and need some extra time to pay it off” said Kevin Mountford, head of banking at the comparison site.
According to the latest ‘lending to Individuals’ figures from the Bank of England, Consumers took an additional £100m of credit card debt in the month of June. This was lower than average of £200m in the previous six months.
Four in Five people 'changed lifestyle to cut costs' 06/08/2010
More than four in five (81%) Brits have taken steps to reduce their outgoings as worries about the economy and personal debt continue, according to Santander.
The banking group’s survey found that over half (55%) of Britons now shop around to get the best deals on groceries, while just over one in four (27%) have switched to cheaper supermarkets.
28% of people have turned to second –hand items from eBay and charity shops instead of buying every thing new, and 12% have even started to grow their own vegetables to save money.
An expert at R3 have said. “one positive thing we can take from the economic downturn is that people have started to take much more care of their finances, and the survey highlights many of the ways are people are doing this.
“Budgeting well and looking around for the best prices are two of the most effective things people can do to help them afford to repay their debts, and to lesson the risk of debt problems in the future”.
Debt, Divorce and death' strain family finances 20/07/2010
An article in the Guardian highlights how the financial costs of the 3D’s debt divorce and death, can put enormous strain on families.
The article runs through several figures regarding the ‘3Ds’ highlighting how easy it is for families to find themselves in financial trouble if something major happens. For Example:
The average household debt (including credit cards and other unsecured debts- but not mortgage debt) has now reached £8,716. If the average was only based on household with some form of unsecured loan, this figure would rise to £318,159.
In 2008, £136.026 divorces were granted.
The average cost of a funeral in the UK is £2,800 (expected to reach £4,100 by 2015.
The paper then goes on to offer some advice about debt, and stresses that ‘prevention is the key’.
‘Budgeting is the tried and tested way of keeping on top of your outgoings’ the article continues. ‘but realistic about how much you need for essential items, and cut down on non essential expenses.’