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Inflexible Friends and Plastic Assets, Why Money isn't Buying
Love Anymore
Consumers reject financial advice in favour of financial
frivolity
It would appear that even though their "friends" aren't as
flexible as they used to be, consumers are still stretching their
credit cards beyond the comfort zone.
The vicious circle of debt manipulation involving banks,
consumers and commercial credit companies is putting consumer
spending under strain, as funds begin to dry up. In May 2005, the
Financial Times reported the accusation that banks were fuelling
Britain's personal debt problem by repeatedly offering
debt-ridden customers loans they were unable to repay.
As the UK's personal debt increases by £1 million every
four minutes, credit card spending habits still seem to be
spiralling out of control. According to Credit Action, nearly 66%
of the adult population have a credit card, with multiple card
holding becoming a growing phenomenon in the UK. More than 60% of
card holders possess at least two cards, with 10% holding at
least five cards. There has also been a significant rise in the
number of personal bankruptcies. In the year up to March 2005,
37,886 people were made bankrupt, a 30% increase on the previous
year.
Credit Action reported that some credit card companies reduced
their minimum repayments from 3% to 2% last month, which has been
seen by some as irresponsible. To put this into perspective, a
£3000 credit card balance at 17.9% APR would now take more
than 40 years to repay if the minimum repayment of 2% is paid
each month, in comparison to 19 years with the 3% minimum
repayment. Barclays even warned of falling profits for the
Barclaycard credit card division last month, as more customers
missed repayments and bad debtors increased.
For those consumers with regular incomes and strong credit
records, credit cards with APRs as low as 6.9% are available,
that's less than half the standard APR most consumers have to pay
on the cards in their wallet. By just using a variety of online
personal finance tools, consumers can save themselves
considerable grief by undertaking some financial homework.
In the UK, a variety of websites are available to compare
credit cards, loans, life insurance, car insurance, mortgages,
savings accounts, Child Trust Funds and current accounts. With
just a few clicks of the mouse, a trusty search engine and a
clear definition of the relevant search terms, such as "credit
card guide" or "loans guide", the consumer can have swift access
to a number of useful research sites including moneynet.co.uk,
moneyfacts, moneyextra and uSwitch. These companies are specially
set up to provide impartial consumer information and by using
them for personal finance research, the consumer could
effectively save thousands of pounds by choosing the most
appropriate credit card, loan and mortgage accounts, not to
mention securing good deals on car insurance, life insurance,
travel insurance and household insurance.
Rachel writes for the personal finance blog Cashzilla.
http://www.cashzilla.co.uk/
Cashzilla is a psychological, technological manifestation of
the financial pressure Rachel faced when she graduated from her
very expensive, much extended degree.
Rachel uses Cashzilla as online therapy for the state of her
finances.
Rachel has used http://www.moneynet.co.uk/ and
http://www.creditaction.org.uk/
in the references for this article.
MORE RESOURCES:
SEC finds shortcomings in credit ratersReuters - 16 hours agoWASHINGTON (Reuters) - Credit rating agencies did not properly manage their conflicts of interests when assigning ratings to structured products such as ... |
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