Concern for Christmas on credit cards

Think Money, a leading financial solutions company, has urged would-be borrowers to consider how they’d pay everything back should they turn to credit in the near future.

With the festive season fast approaching, many people will be covering the cost of Christmas on credit cards, store cards and other forms of credit. It can be a quick and convenient way of spreading the cost of spending at this time of year – and with the base rate at an all-time low, may be an attractive option for some people.

However, there are concerns that borrowers without an adequate financial plan or a strict budget could have difficulties repaying what they owe.

An expert at Think Money commented:

“Financial planning is as important as it’s ever been – especially when it comes to borrowing money. Those of us who are managing well financially may be thinking about making a big purchase on credit – whether that’s home improvements, a new car or a holiday. That’s fine, just as long as those people have planned out a budget and are sure they can afford their repayments.

“Similarly, some people might be making a New Year’s resolution to get their finances in order. For some, that might involve taking out a debt consolidation loan to simplify their finances and set out a clear plan for repaying their debts. This can be a good way of managing debt, but borrowers still need to make sure their repayments fit in with the rest of their budget.”

“The whole team at TopCashBack is delighted and honoured to be named the fifth fastest growing private company in the UK. To be ranked above many household names is a fantastic achievement and a credit to all of the staff here at TopCashBack.

TopCashBack is the UK’s Number 1 Free Cashback Website
Over 3,200 merchants (retailers and product/service providers) pay a referral commission for purchases made on their websites via topcashback.co.uk; but rather than keep this commission, TopCashBack passes 100% straight back to the customer as ‘cashback’, and gives everyone a 1% bonus (at least) from its own pockets on top.

TopCashBack’s fundamental aim is to help all UK consumers save as much money as possible on their online shopping.

Established in 2005 TopCashBack has an ethos of ‘fair play’ and has gone from strength-to-strength with a membership in excess of one million.

Adam Bullock continues:

“The business has grown rapidly in Uttoxeter and Bolton over the last three years; so much so that six months ago we expanded into the capital and established an office in London. Since our incarnation six years ago we have been careful to ensure that we stick to our core values of providing the best cashback rates, excellent customer service and effective use of technology to create a streamlined operation.

“The most remarkable aspect of being listed in the Sunday Times Virgin Fast Track 100 for us is that, we see this as just the start of the growth curve. With less than two percent of the UK population signed up to save money through us, there’s no reason why this growth trend won’t continue as millions more consumers realise just how much they can save on their online shopping by using TopCashBack. With tomorrow being Mega Monday and everyone now getting into the full swing of their Christmas shopping, we hope many more shoppers take advantage of our free money-saving service.”

Professional trustees therefore have a great deal of responsibility, and will also be subject to liability in the event of a pension wind up, where a trust is brought to an end by dividing up remaining assets among the beneficiaries, or members and their relatives as specified under the scheme, in accordance with the trust deed, or what might be described as the ‘constitution’ of the fund.

The guiding principle for independent and professional trustees is that they must act in the best interests of the beneficiaries, and this applies throughout the pension wind up also. Trustees might be personally liable for any losses caused to members of a pension fund if it is found that these were the result of a ‘breach of trust’ during the pension wind up. A breach of trust in this context would be where the trustee sold off assets s/he was not authorised to sell, or secured a company’s debt in such a way as to cause loss when that should have been foreseen. In this way, failing to act or acting carelessly in the administration of the wind up can also amount to a breach of trust.

The liability of independent trustees in the event of a pension wind up is described in law as ‘joint and several’. As such, it is possible to be liable for one trustee to be liable for the actions of another, if that trustee should have taken steps to know and understand what was happening. In this way the liability of trustees is set up so as to place the onus on each trustee to check for potential breaches of trust. If a trustee becomes aware of a breach of trust, even if s/he had nothing to do with brining it about, s/he will be potentially liable. This will be the case unless there is a personal liability protection in operation under the pension scheme.

Special care must be taken by trustees during the unusual event of a pension wind up as liability might arise out of failure to ensure the proper identification of assets through to taking all reasonable steps to ensure the process is completed as quickly as possible. The Pension Protection Fund, the pension regulator, expects a maximum of two years as a wind up period. In particular trustees will be liable throughout this time for keeping beneficiaries of the trust informed as to what is happening to their pensions.

Tax
Income tax
* From April 2012 personal allowance will increase by £630 to £8105.
* This increase won’t be restricted to basic rate tax payers so no one else will be pulled into the higher rate tax band.
* The 50% tax rate will be reviewed and potentially removed if it has not generated sufficient revenue.

National insurance

* Income tax & National Insurance may be merged to a single tax if it is viable to do so.
* However, this will not result in pensioners having to pay National Insurance.
* The 1% National Insurance increase scheduled for April 2011 will go ahead as planned.

Inheritance tax
* The Inheritance Tax Rate will be reduced by 10% for anyone who leaves 10% or more of their estate to charity.

Other tax
* From April 2012 the thresholds for Income Tax, National Insurance, ISAs and Inheritance Tax will increase by the CPI measure of inflation instead of by RPI.
* Taxes on owners of high value property will be reformed.
* Measures to clamp down on tax avoidance will be introduced.
* Income tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April, 2011.

Housing
First time buyers
* £250 million commitment has been made to help first time buyers.
* A new shared equity scheme – First Buy – will help 10,000 families to purchase a new build home.

Mortgage Support
* The Support for Mortgage Interest scheme will be extended for another year.

Council tax
* Every council across the UK has agreed to freeze council tax for the coming year.

Water bills
* Public money will be used to help cut water bills for customers in the South West of England.

Alcohol & Tobacco
Alcohol
* A reduced rate of tax will apply to low strength beers from 1st October, 2011.
* A higher rate of tax will be applied to high strength beers from this date.
* There will be no change to any other alcohol duty rates.

Tobacco
* Tobacco duty rates to increase by 2% above inflation.
* Tax on hand-rolled tobacco will increase by an additional 10%.

Transport
Fuel
* Fuel duty will be cut by 1p a litre from 6pm today (23rd March, 2011).
* The planned 1p increase in fuel duty scheduled for April will be pushed back a year.
* The subsequent inflation-linked rise scheduled for April 2012 will be pushed back until the following summer.
* A Fair Fuel Stabiliser will be introduced from tomorrow – fuel duty will go down when fuel prices increase, & go up when fuel prices fall.
* The fuel duty escalator will be scrapped for the rest of this Parliament.
* A rural fuel duty scheme will be piloted.

Approved mileage allowance
* Approved mileage allowance payments will increase to 45p a mile for the first 10,000 miles & 25p a mile thereafter.
* It will also be paid for volunteers travelling as passengers.

Road tax
* Vehicle Exercise Duty will increase by inflation only.

Trains
* £200 million will be invested in regional railways.

Flights
* The planned increase in air passenger duty will be delayed until next year.

Employment & Education
Employment
* A new start up scheme to support entrepreneurs – Start Up Britain – will be launched.
* 21 new enterprise zones will be introduced.
* Entrepreneur’s Relief will be doubled to £10 million on 6th April.

Education
* 24 new university technical colleges will be set up.
* 100,000 places in new work experience schemes will be introduced.
* 50,000 apprenticeship places will be created over the next four years.

Pensions
State pension
* A new, single tier, flat rate pension based on contributions will be introduced subject to a consultation.
* This will be worth approximately £140 a week but it will take years to implement.
* Current pensioners won’t be affected by the change.
* Plans to introduce automatic increases to the State Pension Age have been brought forward subject to review.

Public sector pensions
* Public sector workers will have to increase their pension contributions by approx. 3%.
* The government will consult on scrapping final salary pensions for public sector workers & replacing them with career average pension benefits.

For further information and to discuss your thoughts on the 2011 Budget speech visit the money.co.uk budget special.

Getting into debt has become an integral part of growing up it appears and we must all have witnessed at some time or other the heartbreak that this awful addiction has inflicted upon family members and people that we know.

The surprise is that it continues unabated, our ‘must have it now society’ is fuelled by easy borrowing and credit cards despite the banks making it more difficult to do so.

There is also no longer any stigma attached to the process of being made bankrupt and the consequences thereafter, it is almost seen as part and parcel of the deal, made all the easier in recent times by companies specialising in this area who can rid personal debts at the click of a finger while lining their own pockets.

The credit crunch has only served to highlight the problem that has been growing year on year for decades and it is quite scary seeing the details from this infographic and wondering what the future holds for a nation that is unable to pay its way out of debt.

Infographic by Money Debt & Credit

• We would like to thank the charity Credit Action for their help with core statistics

Although there was a drop in the figures during the final three months of 2010, officials have suggested that this may have more to do with the adverse weather conditions suffered, preventing from people attending court,a more sympathetic attitude from lenders or people putting off insolvency until the new year.

The overall figure for personal insovencies during 2010 wa s recorded at 135,089.

Out of that figure 59,194 took the traditional bankruptcy route, while 50,716 chose to enter into an Individual Voluntary Arrangement (IVA) which allow a deal to be struck between debtors and creditors.

There were also 25,179 Debt Relief Orders – a relatively new style of insolvency for relatively low debts.

• Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditor
• Individual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of years
• Debt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy

While personal insolvencies reached a new high there was surprising news that the number of businesses in England going bust fell by 23% in 2010.

Even though the ‘green shoots’ of recovery sprouted long ago – according to some economists, at least – the recovery in the lending markets remain slow. So what’s going on, and when are we likely to see real recovery?

A background

Before we can really discuss how things are likely to move forward, it’s important to have a proper understanding of what led to the credit crisis, and where we are now.

Before the credit crisis, financial institutions were basically lending money to people from a wide range of backgrounds – some comfortable financially, and some less so. Over time, however, this meant that some people borrowed money that they could not realistically afford to repay, often in the form of mortgages.

In short, there came a point when many people began to default on their debt repayments, with many more on the brink of doing so. Lenders reacted by reducing their lending, in an attempt to protect themselves from further damage.

With time (and a lot of government intervention), most of the banks are now back on relatively steady ground. But the lessons learnt from this crisis mean that lenders are still more cautious about who they lend to.

What next?

Most economists would agree that the wheels are already in motion. Lending levels are on the rise – albeit slowly – but it may be a while before we see anything like the kind of lending seen before the crisis.

Gross ‘consumer credit’ lending, for example, rose from £13.6bn in August 2009 to £14.6bn in August 2010. Back in August 2004, it stood at £18.2bn.

Lenders always have an incentive to lend – making money – but they are currently having to balance that with the continuing uncertainty in the economy. Slowly but surely, it’s likely that lending will increase in the coming months, unless anything else significant happens to damage everyone’s expectations for the economy.

It’s also important to note that lower lending is not all to do with the lenders. Demand is also in relatively short supply, partly due to caution about the economy in general, and partly because fewer people are in the position to consider borrowing money.

Being able to budget during the season can be difficult, so many people tend to fall back on credit cards and overdrafts. This is where a prepaid card can work wonders.

A recent poll conducted by the Evangelical Alliance discovered that more than 50% of those questioned admitted to spending more at Christmas in 2009 than they could afford. Almost four in 10 (39%) of respondents used credit cards to cover the extra cost, while 33% said that it would take them more than six months to pay off what they had spent.

However, there is a better solution. A prepaid card such as those on offer from Cashplus can be used to help people stick to their Christmas budget this year. The card can be topped up from an existing bank account or with cash at any UK Post Office^® branch and then used to help pay for Christmas expenses. It is even possible to pay regular small amounts onto the card throughout the year to ensure that enough money is put aside, thus spreading the cost of Christmas over the year.

Reserving a prepaid card for Christmas will prevent any overspending and will help to ensure that other important bills are still paid throughout the season.

There’s very little that’s worse than entering the New Year and having to cope with charges relating to credit card use, overdrafts and borrowings relating to festive spending. A Cashplus prepaid card could help prevent this. As only the money that is loaded onto the card can be spent, there’s no risk of running up debt using a prepaid card.

Getting a Cashplus prepaid card is also extremely easy. No credit checks are carried out and everyone is accepted*, enabling those who may not have been previously eligible for a debit or credit card access to the world of online shopping. Add to that the fact that additional cardholders can be named and this means that it’s a great financial solution for the whole family. Younger family members can be issued with a card to do their shopping without having to carry cash. It will enable them to learn very useful budgeting skills and allow parents the opportunity to limit their spending.

While shopping online may be worrying for some people, the Cashplus prepaid Gold MasterCard^® offers the advantage of up to 27% Cashback as well as a free purchase protection benefit. This gives the user valuable peace of mind, making it ideal for online shoppers.

Of course, a prepaid card isn’t just for Christmas and can be used for holidays, online spending and more throughout the year. What better way is there to stick to a budget?

*Subject to the card issuer’s terms and conditions.

This is where short-term payday loans can come in handy.

Payday loans are short-term loans typically between £100 and £1,000 and lasting up to 31 days. The appeal of borrowing money to pay the bills or spend on holiday via payday loans is that the application process can be as quick as 24 hours, meaning that the money is available immediately and with minimum fuss.

Due to the country’s economic uncertainty, the increase in members of the public taking out short term payday loans has increased fivefold. With payday loans no faxing is involved, which saves time on applications, increasing the temptation for people to take out these short-term financial solutions.

Online application forms can take as little as two minutes to fill out and if completed before 14:00 you can receive same day loans. If completed after this time, the money is available the next working day, which is why payday loans are the quickest route to borrowing that extra bit of money you need to meet your monthly expenses. This also means that payday loans are often favoured over unsecure loans when it comes to borrowing money, as these usually take up to 28 days to be approved following the application.

Payday loans with no faxing means there is no lengthy paperwork; instead of submitting a cheque to cover the borrowed amount, quick online forms only require a name, address, phone number and basic financial information relating to the borrower in question. Tighter credit standards have meant that it is becoming harder to borrow money on a short-term basis. Payday loans have made this more accessible to the general public.

As with any loan, there are requirements that need to be met by the borrower in order to qualify for a payday loan. You must be in full-time employment and generally earning over £750 a month; this ensures that you are going to be able to pay back the sum at the end of the stated time and that you are financially stable enough to benefit from a short-term loan. You must also have an active bank account in your name and registered to your address with a debit card to qualify for a payday loan, something that the majority of people already have.

Interest is something that applies to all loan types; this means that in return for borrowing the money, you must pay the lender a sum on top. One of the stigmas involving payday loans is that people are cautious of the high interest rates. Typically, the interest rates lie around the 1,200 and 1,500 per cent APR mark, which compared to long-term loans can seem to some borrowers to be rather high. To put the rate into context, though, a practical example is borrowing £100 at an interest rate of 1,250 per cent for 31 days, which would require a total sum of £125 to be paid at the end of the period. Fortunately, there are no administration fees or hidden costs associated with payday loans that can often occur with longer term loans.

One of the main reasons for applying for a short-term payday loan is to keep you in arrears with other financial commitments you may have. Mortgage payments, credit card charges and rent are all payments that need to be met on time; payday loans mean that you can avoid late charges and therefore further costs sending you into the deeper spiral of bank charges and independent company charges.

Should you require an extension to your short-term payday loan, this option is also available from many lenders. Although it will obviously require more interest to be repaid in the long run, they allow you to borrow the money and roll it over into the next month. Companies usually require you to make some sort of payment to reduce the overall cost of the loan before allowing you to carry over the outstanding balance, but extending the time scale of your loan is an option.

Another benefit of payday loans is that people who are tenants can make use of the borrowed money, as the loan doesn’t require the borrower to be a homeowner. Poor credit ratings can also be a deciding factor when it comes to borrowing money, but short-term loans such as these are also available to people with low credit ratings, making them accessible to all needs and requirements. This is why payday loans sometimes encompass bad credit loans, as even people who are deemed to have bad credit ratings are still eligible to borrow money via short loans, as long as they are over 18 and meet the other banking and income requirements. With no credit checks carried out, payday loans can help to build back up your good credit rating if you pay off the due amount on the due date, or even before.

The only essential warning that comes with a payday loan is that they should only be viewed as a short-term solution for financing your commitments. Though they can be a particularly beneficial answer to borrowing small values of money for short periods, they should not be used as long-term solutions. Due to the high interest rates, payday loans are not advisable to solve ongoing financial problems for if you cannot afford to repay the total amount, the value you owe can easily spiral out of control.

We all dream of living the high life, spending at our will and without a money worry in the world. Sadly, for the majority of us, especially in today’s financial climate, a little bit of extra cash this month wouldn’t go a miss. If you meet the age requirements and you are able to pay the specified amount back, payday loans can be the perfect solution to ease you through to your next pay cheque.

The information is supplied by money.co.uk and clearly illustrates how the rich and poor divide in the UK could be set to increase dramatically as various groups face up to the possibility of losing up to 20% of their income.

While some groups stand to suffer a loss in their income others could actually benefit from the cuts.

UK Debt