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Archive for the ‘credit crunch’ Category

Banks cash in on steep overdraft rates and cuts in in-credit interest rates

Monday, August 17th, 2009

Despite the fact that we own 70% of RBS this hasn’t stopped them extracting more from us through some of the highest unauthorised overdraft charges around. It’s the same with most banks as findings today show that banks have cut interest rates on in-credit current accounts but at the same time increased charges for unauthorised overdrafts and increased interest rates on authorised overdrawn accounts reports Times Online. RBS, majority owned by the British taxpayer, has been named and shamed as offering the most extortionate fees following a cut in the fees by the majority of the major banks.

Bank of England findings show that the average authorised overdraft rate in July was the highest since 1995, with this 4 out of 5 current accounts pay less than 0.1% on balances in credit and half pay no interest at all. RBS takes a lot of the flak in this banking clamp down on consumer welfare as their penalty fees for unauthorised overdraft of £118 for an account overdrawn by £30 is £28 more expensive then the next most expensive provider Alliance and Leicester which charges £90.

When it comes to current accounts, Nationwide is shown to be the worst culprits, with an authorised overdraft rate increase of 11.5 percentage points to 18.9% in two years. On the other hand the better current accounts are offered from the likes of Cahoot which gives 1.1% on in-credit accounts and only charges 11.8% on authorised overdrafts.

For credit cards the overall average rate on purchases has risen in the past tow years from 16.5% to 18.1%. Again Nationwide has been criticised this time for upping its Visa from 17.9% to 19.9% in May. The best advice would be to go to Virgin Money for a card as they offer a o% balance transfer deal which is interest-free Months with 16.6% charged on new purposes.

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Tags: bank charges, credit cards, current account
Posted in credit card, credit crunch, payday loans | 1 Comment »

High-street lenders face further pressure to ease up lending

Thursday, August 13th, 2009

Further pressure has been levelled at high street banks to encourage them to lend more and get the economy back on the road to recovery, reports Times Online. The Bank of England threatened to cut the rate it pays to high street lenders. The Governor of the Bank of England Mervyn King stated that he was considering cutting the interest it pays on cash held by the banks in its reserve accounts.

The amount in these reserve accounts has increased substantially in the last year from £90.6 billion at the end of 2008 to around £157 billion in the first half of this year. King also forecasted more gloomy news, stating that the recovery would be ‘slow and protracted’, where consumers will feel the fallout for years to come.

This comes at a time when the bank stunned many by injecting £50 billion into the economy to prevent a slowdown, King states that the British economy had shrunk much quicker and deeper than his team had predicted and requires ‘robust growth’ to put it onto stable footing.

With this there has been news of rising unemployment, which had jumped to a 14-year high of 2.43 million in the last three months. King highlighted the significant role banks would have in stimulating a recovery, as growth would continue to be curbed unless banks started lending again. Lending to non-financial corporations slumped by a record £14.7 Billion between May and June this year, despite the bank’s measures to unclog the credit markets via quantitative easing.

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Tags: Bank of England, Lending, mervyn king, payday loan
Posted in Government, credit crunch | No Comments »

Is a minor infraction on your credit rating preventing you getting the loan you need? Then its time you spoke to 24/7 Moneybox

Tuesday, August 11th, 2009

Despite many banks starting to generate profits again people are still finding it difficult to borrow. Lenders are taking increasingly tough lines when it comes to customers’ credit ratings, reports Times Online. Even minor slips by borrowers are seized upon as an excuse to disqualify potential borrowers, for instance even a single late payments would be enough to jeopardize an application for a loan.

Credit agencies and banks are still taking a very cautious approach, despite the Government’s best efforts to try and ease up lending once again. People who have missed payments for good reasons: illness, holidays or because they were moving homes could have severe knock-on effects to their credit rating and even current borrowing commitments where loans could have their spending limits cut.

Banks do not readily release information about how many applicants are turned down but the credit reference agencies show an insight into the problem. Equifax, a credit reference agency shows a 10% increase in requests for credit reports in the past year, which is down to people constantly having to reapply after being denied and thus re-request credit reports.

This is worrying, as a request for a credit report will leave a footprint on a customer’s credit rating, too many footprints, and you could appear desperate for a loan and be the last kind of customer banks want to offer money to. Simple things can affect a credit rating; Kate Ness from Berkshire cancelled a Vodafone contract within the 14-day cancellation period and sent it back. However, she was startled to find that Vodafone had informed a credit reference agency that she had a credit agreement in arrears, which made it difficult to take out a mortgage.

Do you have a bad credit rating or have been refused a loan in the past because of pedantic instances where you have been troubled by borrowing? Well then its time you spoke to us here at 24/7 Moneybox, we can offer you a payday loan to cover those urgent expenses despite you having a bad credit rating, we will look at your credit rating and being a fair bunch will understand that people are only human and that mistakes can be made. So don’t worry about your urgent bills or a bad credit rating any longer apply today!

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Tags: bad credit, credit ratings, poor credit
Posted in credit crunch, payday loans | 1 Comment »

Industrial backlash following pension scrappage at Barclays

Friday, July 17th, 2009

Are you affected by the closing down of a final salary pension scheme? Well Barclay’s decision to get rid of its final salary pension schemes has led to outrage from the unions associated with the bank, BBC Online reports. The scheme was originally stopped for new members, however, new proposals will stop the scheme letting existing members receive a final salary pension, which has meant that anger has reached critical mass.

Unite; the union that represents 25,000 Barclay’s workers will take a ballot for further industrial action at some stage during August, following a consultative ballot where 92% said they wanted to be balloted on industrial action.

Barclays has not been the only company to close their final salary pension schemes, many have seen the rising costs as too much to fund. 18,000 existing staff will be taken off the scheme.

There has been a real variance in Barclays’ UK Retirement Fund, which two years ago recorded a surplus of around £200m compared with a huge deficit of £2.2bn last September. A shortfall of £200.1bn exists in the UK’s 7,400 defined-benefit schemes at the end of June according to the Pension Protection Fund (PPF).

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Tags: Pension protection fund, pensions, trade unions
Posted in credit crunch, recession | No Comments »

Increasingly more people feel the emotional strain of financial problems - talk to 24/7 Moneybox and relax

Wednesday, July 15th, 2009

Are you getting depressed about money? BBC Online highlights comments from the counselling charity Relate who are arguing that many younger people are becoming increasingly depressed about their financial situation, of the 15,000 young people that they see every year about a quarter of them are depressed about money or a lack there of.

Often these money problems significantly compound other problems that young people might already face like marital breakdown and can lead to further behavioural problems. Relate findings show that money problems will strain family relationships, deteriorate behaviour academically and damage relationships with friends.

With increasing unemployment and difficult economic conditions it is expected that this problem will be exacerbated over the next few years if the recession deepens.

Relate’s Paula Hall, advises that there is a fine line between being realistic and being hopeful. Depressed realists have got to understand that ‘we aren’t going to be in a recession for ever and we are still in a fairly wealthy country’.

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Tags: depression, recession, Unemployment
Posted in Unemployment, credit crunch, recession | No Comments »

Governmental measures to kick-start the mortgage sector show fundamental flaws

Tuesday, July 14th, 2009

How is your mortgage looking? The government is struggling to get the mortgage sector into swing as this latest attempt to get Britain out of the financial rut is being condemned as showing significant weaknesses, reports BBC Online. The £50bn asset-backed guarantee scheme (ABS) has been criticised as ‘doomed to failure’ according to the Communities and Local Government (CLG) Committee. Two reports from separate institutions have highlighted that UK property prices will continue to struggle to make a recovery until mortgages were more readily available.

Figures do show that mortgage lending has picked up, but the Council of Mortgage Lenders (CML) has highlighted it is still 28% lower than two years ago.

The government scheme, which was introduced in this year’s budget, provides a guarantee on lenders’ mortgage-backed securities. This allows lenders to sell on mortgages to lenders raising new money to lend to consumers.

However, MPs have highlighted that restrictions on the partaking institutions and the narrow band of loans that are actually covered has meant the scheme has limited effectiveness.

Dr Phyllis Starkey who chairs the CLG said that the ‘CLG and senior officials must maintain pressure on the Treasury to bring in new measures to get the mortgage market moving. Further shortcomings have highlighted that not enough emphasis is being placed on the rental sector an important part of the sector.

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Tags: council of mortgage lenders, house prices, mortgages
Posted in Government, credit crunch, recession | No Comments »

Nationwide offers homeowners 125% of future property

Friday, July 10th, 2009

Stuck in negative equity? BBC Online has investigated a new mortgage proposed by the building society Nationwide which will give borrowers the chance to get money up to the value of 125% of the property they intend to buy with it. The mortgage would be only available to those existing customers in negative equity, where the value of the house a person owns is less than the amount they owe on their mortgage.

The Financial Services Authority has made suggestions at limiting borrowing to only 100% of the home. As it stands any new borrower would only be able to take out 85% of the value of the home, and existing customers would be able to take out 95% at various rates of interest.

However, despite the financial product first being offered in June it has not been actively marketed and none of Nationwide’s customers have taken it.

Loans above 100% have received a lot of criticism at the height of the housing boom, which effectively placed borrowers in imminent negative equity, in particular the notable culprits was the now nationalised Northern Rock. On one side Ray Boulger of John Charcol Mortgage Broking said the deal to be a ‘consumer friendly move’. However, Critics like Jonathan Davis argue that it is exposing itself to potential further losses.

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Tags: FSA, housing, mortgages
Posted in credit crunch, recession | No Comments »

House prices up or down?

Wednesday, July 8th, 2009

The latest part of the roller coaster that is house prices comes from Halifax. Their findings show a sharp fall in house prices in June, which has partly reversed the gradual increase of house prices we had seen in the last couple of months, reports BBC News Online. The news contrasts greatly to findings showing a large 2.6% increase in prices back in May.

The findings come from Halifax’s property survey, some good news highlighted the slowing annual decrease in prices from 16.3% to 15% last month, they went on to proclaim that there was evidence the property market is stabilising after sharp slumps since mid 2007.

Martin Ellis Halifax’s chief lender states that prices have ‘fallen by only 1.9% in the past three months’ the lowest quarterly decline, however, a long way from those green shoots predicted here in an earlier blog.

So why have these figures told a different story to that of Nationwide’s figures which sparked the earlier blog about a spring bounce or green shoots? Halifax, whose figures are based on a sample of its own lending said prices had only risen once in the last 4 months and are still 2% lower than February. Nationwide however, had its findings showing that prices had risen in three of the last four months.
Overall there is hope as undoubtedly house prices are picking up due to low levels of interest rates. HM Revenue and Customs has shown that completed sales in May were at their highest since October 2008.

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Tags: house prices, housing, recession
Posted in credit crunch, recession | 1 Comment »

Beware of cuts in the Minimum Repayment Level

Monday, July 6th, 2009

Are you one of those who will see a cut in the minimum repayment on your credit card? Times online reports that Barclaycard, the largest issuer of credit cards, said the changes will take effect from next month. 12 million people will enjoy the level falling from 2.25% to 1.5%. Beware though; the bank’s act of ‘generosity’ will actually make you pay back more in the long run.

The announcement follows figures showing that £2.7 billion of new debt has been shouldered by the UK economy in just the first quarter of this year. Savings, on the other hand, have hit an all time low of 14 billion according to Unbiased.co.uk. This equates to 19p borrowed of every £1 saved. So more doom and gloom being spelled out by industry analysts. Debt counselling services have reported record numbers of people seeking advice following unemployment.

You would think that the cutting of minimum repayment levels is seen as a generous act by credit card companies. However, Martin Lewis from moneysavingexpert, states that their existence at all is actually ‘keeping customers perpetually in debt’. By paying less back there is a greater amount still owed to the company therefore the rates charged will increase the amount of interest that will need to be paid back when the loan is finally paid off.

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Tags: barclaycard, credit cards, recession, Unemployment
Posted in credit card, credit crunch, payday loans | No Comments »

Rising Costs hit hard – let 24/7 Moneybox be your lifeline

Wednesday, July 1st, 2009

Many of you may already know about rising costs from personal experience, however, the Joseph Rowntree Foundation has officially highlighted that the cost of living is rising faster than average prices for many people, according to BBC news.

Costs for many households have risen sharply, in particular in the lowest income bracket where 1 in 4 are living below minimum income levels as stipulated by the Rowntree Foundation. The costs for a single family on a low income budget are up by 5.3%, pensioners and parents also faced 5% increases as well. The reason behind this the foundation has highlighted is that low income consumers spend more as a proportion of their income on the price sky rockets of fuel, food and public transport.

Rowntree created the benchmark of the minimum income level as that of which people have a ‘socially acceptable standard of living’, also that people has ‘what they need in order to have the opportunities and choice to participate in full in society’.

However, the issue of how you define poverty is a contentious one. In particular as Rowntree has highlighted, during the recession poverty has actually gone down. This is due to the Government pegging poverty as living below 60% of national average earnings, however, obviously earnings have taken a hit, in fact it has stopped growing completely this year, while benefits uptake have increased by 5%. This has all lead to fewer classed as in poverty. The report will also tie in with the Government’s bill which will make the goal to halve child poverty by 2020 law.

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