Does the general public care about huge levels of unsustainable debt? Not if it’s the government’s, apparently. As my colleagues wrote in this morning’s FT:
Ten leading investment funds all told the FT that a hung Parliament, potentially delaying action to tackle the UK’s £167bn deficit, was the biggest threat to the market… But Sunday’s polls suggest the public does not share market concerns about a hung parliament. In polls by ComRes and YouGov, they said that would be their preferred outcome. More…
Are Britain’s consumers so intoxicated, or numbed, from their 13-year credit binge that they no longer think of debt as a problem? Not so, claimed Sainsbury’s Finance – arguably the ultimate “off-the-shelf” lender – this morning:
Is popular culture to blame for the state of household finances? It occurs to me that today’s indebted thirty-somethings had the misfortune to grow up in the 1980s to a soundtrack of such musically – and economically – dubious classics as ‘Money For Nothing’ by Dire Straits, ‘Gold’ by Spandau Ballet, and ‘Opportunities (Let’s Make Lots of Money)’ by the Pet Shop Boys. They clearly switched off whenever Radio 1′s ‘Oooh’ Gary Davies introduced ‘Money’s Too Tight to Mention’ by Simply Red – but then didn’t we all?
So it’s perhaps little wonder that this generation’s children are now growing up in households with average short-term debt of £8,653, according to Scottish Widows. They’re having to live with it, too – Equifax reports that one third of borrowers are only paying off up to 25 per cent of these credit card debts each month, with nearly one in four making only the minimum repayment.
But the children may grow up to be more financially savvy than their parents – thanks to the music of Tinchy Stryder, the undisputed ‘Prince of Grime’. For those of you unfamiliar with the latest urban sounds, Tinchy recently reached number one, in what Gary used call the Hit Parade, with the self-confidently titled ‘Number One’, featuring N-Dubz. And now, he is giving personal finance lessons in schools.
It’s official, UK individuals are more inclined to spend their money than save it.
A survey of Britain’s wealth published this week by the Office for National Statistics showed that 44 per cent of the public would rather have a good standard of life now than provide for a comfortable retirement. The report showed that 19.3m households, nearly 80 per cent of the total, have racked up an average of £7,200 each on credit cards, loans and other nonmortgage related debts.
But while it is still relatively easy to borrow on credit cards and through personal loans it is still important for consumers to maintain a good credit rating in order to get the cheapest rates on this debt.
Here are five tips* for improving your credit profile:
We’ve just heard that the judgement on the bank charges test case will be given at 9.45am at the Supreme Court’s Parliament Square HQ, London, next Wednesday 25 November 2009. So if you’re one of the thousands of individuals to have been charged high fees from your bank watch out for the result of the case on our homepage.
The case has been followed closely after it was revealed that the banks have made an estimated £2bn a year by charging customers hefty fees for unauthorised overdrafts, bounced cheques and direct debits. The major legal challenge is examining whether these are legally “fair”. If the supreme court justices rule against the banks, it could open the door for billions of pounds worth of charges to be paid back.
Speaking ahead of the release of tomorrow’s national insolvency statistics Deloitte’s Contentious insolvency Group predicts the figures will break through the records again.
Louise Brittain, partner in the group, expects the number of people filing for personal insolvency in Q3 will exceed the 30,000 mark. She says:
This figure is staggering, and unfortunately the end is not in sight. I fully expect that by the year end, 2009 will have broken all personal insolvency records, with the total number of petitions likely to exceed the 130,000 mark.
The types of people filing for insolvency is also expected to change. There will be mix of sole traders and individuals with high credit card debt and also those who have lost or have had to reduce their income and have struggled to make the repayments on their fixed rate mortgages.
Look out for the piece on insolvency tomorrow on Personal Finance.
Gordon Brown wants to stop companies increasing interest rates on existing debts without telling card holders, issuing unsolicited credit card cheques and relaxing credit limits without being asked.
Speaking in a podcast, released on the 10 Downing Street website and YouTube at the weekend, he said: ‘We are announcing measures to make the credit and store card companies clean up their act to get you a fairer deal.’
Listen to the PM’s podcast here.
The recording comes ahead of Tuesday’s publication (by the consumer affairs minister Kevin Brennan) of the results of a review into credit and store card practices that it has been conducting over the summer. The review will include a proposal forcing an increase to the level of minimum monthly repayments card issuers ask for each month.
Watch out for Matthew Vincent’s story on this subject and what it could mean for you in tomorrow’s FT and on the personal finance website.
Unsolicited credit card cheques to be outlawed in white paper plans, FT, July 2, 2009
Thousands of students are waiting to hear from the body responsible for administering student loans whether their funding has been confirmed for this year.
For some of them, the answer could mean the difference between working extra shifts at the pub or enjoying the last weeks of summer before starting university next month.
But for ex-students, there has been some unexpected good news: their student loans have shrunk - even if they haven’t paid off a penny.