Entries Tagged 'finance' ↓
November 4th, 2009 — finance
Recently, I was victim of identity theft. The good news is that two companies very.co.uk and Halifax both recognised the fraudulent application and so the identity thief was not able to use my details to open fake accounts.
There is lots of good information at UK Fraud Service CIFAS After this incident, an extra password has been put in place for anyone opening a new password. These are some tips to avoid Identity Fraud
There are so many ways your identity can be detrimentally damaged and this will give you some tips to protect yourself against others.
On Line Protection
- Think about the risks when working online. Only buy from reputable sites with Https and recognised padlock security.
- Do not be tricked by online crooks into giving them your information. Beware of fake emails with links to convincing but fraudulent websites. They want to spend your money, tap your bank account and use your credit cards.
- Do not succumb to phishing by giving out your name, bank details, passwords or information to anyone. Block unwanted spam and use a modern browser. Continue reading →
December 18th, 2008 — finance
If recent past history is anything to go by, the UK is not a nation of savers. This year, the UK savings ratio fell close to 0% a post war record. Levels of consumer borrowing have reached record highs – in terms of both secured borrowing (mortgages) and unsecured borrowing (credit cards and personal loans. In a bid to avoid recession, the government have borrowed heavily in order to finance tax cuts and hopefully stimulate the economy.
However, the global credit crunch and series of financial disasters have helped to shift consumers’ attitudes about spending and saving. There is a general feeling that we have been borrowing too much and saving too little. It is suddenly no longer cool to be buying on plastic and remortgaging to the hilt to afford a new luxury car. Instead the new vogue is to display frugal shopping habits. – Cut price supermarkets like Netto and Aldi are doing very well. More upmarket food retailers like Marks and Spencer are having to entice customers with price cuts.
It is becoming more popular to look for ways to save money and display frugal spending habits. E.g. avoiding unnecessary Christmas presents.
Any move towards deflation would increase this new incentive to save. As people will delay purchasing in the hope that prices will become cheaper in the future.
This new frugality, is one reason why the government’s tax cuts and the interest rate cuts are not encouraging spending. For example, people are using their lower mortgage repayments to pay off more of their mortgage debt.
April 25th, 2008 — finance, mortgages
In a decision by the high court yesterday, the decision to cap bank charges was upheld by the High Court. Seven Banks and one building society had taken the Office of Fair Trading to Court; they argued the OFT did not have the right to impose caps on bank charges. However, the High court found in favour of the OFT and this presents a big boon to consumers, who are will see lower bank charges. It also opens the gate for consumers to demand refunds for previous bank charges.
However, the big banks such as HSBOS may challenge the court ruling, they have until May 22nd to launch an appeal. Given the state of the financial markets, banks are likely to take any lifeline to defer the decision. However, the most likely occurence is that bank charges will become lower, Which magazine have called on banks to admit defeat and start paying back the estimated £1 billion. To benefit from this ruling, it is essential to contact your bank and ask for a refund for any bank charges.
How To Get A Refund for A Bank Charge.
If you have been charged excessively for things such as going overdrawn. Make a list of all the bank charges by looking at your statement.
In the first instance you should write to the bank, stating what you were charged. Then ask for a refund of the excessive amount. Continue reading →
March 28th, 2008 — finance
Effective financial planning can enable you to get on top of your finances and avoid stressful experiences of debt. To make the most effective use of any financial plan it is important to consider what steps will actually make a significant difference. These are some common sense ideas which will help to create a workable solution to even the most difficult of problems.
1. Be Realistic
If you plan to reduce your debt by £10,000 in a short space of time, you will only be setting an unrealistic target. It is better to plan to achieve manageable reductions in debt and target a gradual improvement in finances. Unfortunately, there is no magic wand we can wave to solve our financial problems. However, if we our conscious of our financial goals then gradually our situation will improve.
2. Be Aware of Current Situation.
Often the key to improving our finances is simply understanding our current situation and why we are going overdrawn. Sometimes we prefer to ignore our financial difficulties but this only compounds the situation. To have effective planning, we need to know where we spend our money. This alone can be a bit of an eyeopener. If we realise how much we spend on takeaways or magazine subscriptions, we would think much carefully about whether we want to keep spending money on them.
3. Prioritise
When planning your financial future, it is important to prioritise your most important goals. What do you want to aim for? If your aim is to reduce your debt, set aside a certain lump sum from your monthly income to pay off the most expensive debt. Don’t spend your time and energies in worrying about very small bills or moving money for very small amounts of interest savings. Value your time and prioritise in dealing with the most significant problems first; this will give the biggest return. As many suggest often 80% of our improvements can be made by focusing on 20% of our tasks. Look at your biggest bills and out-goings first; if you can make savings here, then you will have a good chance to make a real difference.
4. Make it Simple
The key to good financial planning is to make it simple and workable. If you have very complicated plans which require careful calculations and frequent balance transfers, you will be spending too long in managing your affairs. The simpler the planning is the more likely you are to stick to it and make it work.
5. Set Targets
A good plan should have a clear goal to aim for. This could be reducing debt by £2,000; increasing income by £2,000 or just saving up a certain amount. If the targets are achievable they will give a sense of satisfaction when attained. This will encourage to set more optimistic targets the next time. A sense of continual progress is important for developing a positive attitude to money.
Continue reading →
March 3rd, 2008 — finance
Complaining to your bank can be a daunting experience, but, when you have a lot of money at stake it is important that you complain in the right circumstances and in the right way to make sure the banks doesn’t take advantage of consumers.
Situations where it is helpful to complain.
Misselling of financial products.
If you think that you have been sold products without the full information being made clear at the beginning. For example, recently UK banks were heavily criticised for misselling insurance of loans. PPI. In many instances, the true cost wasn’t spelt out; the insurance was often very difficult to claim; and many consumers were given the impression that the insurance was a necessary part of the loan.
Continue reading →
February 11th, 2008 — finance
The Financial Ombudsman Service is currently receiving a large number of complaints regarding mortgage endowment policies which have offered a poor return for investors. A mortgage endowment policy is supposed to have a separate investment policy which enables the mortgage capital to be paid off at the end of the term. However, many of these endowment policies sold in the 1980s have given very bad value.
The Complaints Procedure
The Financial Ombudsman Service has 500 specialist staff for dealing with complaints. They seek to resolve issues fairly and quickly, without recourse to a court of law. Their decisions are based on written information given by each party. Often they will seek to act as mediators – getting both sides to agree on a compromise decision, without the necessity of a lengthy detailed investigation.
Before bringing a complaint to the Financial Ombudsman Service, it is important to try and resolve it directly with the company. Complaints to the FOS should be only after other avenues have failed.
Continue reading →
February 7th, 2008 — finance
These are products which can seriously damage your financial wealth. In some cases, the products can be OK if used carefully. But, often the principle seems to be merely taking advantage of the unwary consumer. Some of these products are blatantly bad value; but, others have their charges cleverly hidden. Make sure you don’t get caught up in products such as these.
10 Financial Products to Avoid
1. Credit Cards if paying interest
If you pay your balance off every month, credit cards can be beneficial and helpful. However, if you start accumulating debt, the interest payments can become a real burden making it difficult to ever pay off the original debt. Typical interest rates can be 15-16%. Which means on a balance of $1,000 dollars you will be paying over $160 interest. The interest burden is magnified because you will start paying interest on the interest charges. Many credit cards make it easy to only pay a small monthly payment. But, in paying only a minimum the debt burden can easily escalate. The other feature of a credit card is that it is easy to buy impulsively, without thinking about your budget. If you are frequently tempted to splash out on plastic and worry about it later, consider tearing them up and just spending the cash in your pocket.
2. Pay Day Loans
Who would want to take a loan with an annual interest payment of 2,317%? Pay Day Loans work by making short term loans of a few days, at a certain fixed cost. However, this often disguises the fact that it is basically a loan with an excessively high interest rate. If you make a habit of paying interest rates of over %2,000 it only increases the likelyhood that you will need more loans in the future. Because people spend a high % of their income on getting a short term loan, there budget is stretched making it more likely that you will need to keep borrowing. A pay day loan may be better than defaulting on another loan repayment, or borrowing from a loan shark. But, they should be seen as a last resort with the cost fully appreciated by the potential borrower.
3. Loan payment Insurance
In the UK and US, investigations found that banks have been guilty of misselling insurance for loans (PPI). Basically, you pay a monthly premium to protect your loan repayments in case of illness. Often this kind of insurance works out very expensive; the insurance can cost up to 50% of the loan. (It makes the interest rate on the loan look extortionate) Furthermore it was revealed that banks kept upto 80% of the money paid in. In practise the banks are very reluctant to pay out and they find many reasons why you are not actually eligible. Many people who took out the extra insurance were also not aware that the loan does not require insurance to be taken out; many borrowers were under the impression that the insurance was essential for the loan. There are some things we do need to insure, but there are also times when we need to avoid taking out insurance schemes that are both very expensive and unnecessary.
4. The Balloon Mortgage
Never has one financial product done so much to undermine an economy. A balloon mortgage is a term to describe a mortgage product with an attractive 1 year interest rate, which then shoots up to a much higher interest rate after the first year. Introductory deals are not intrinsically bad, but, the problem with these kind of mortgages was that many homeowners were unaware of the true cost of the mortgage payments after the introductory period ended. One would assume that the subprime crisis would have made these kind of products very rare, but this experience shows the problem of trusting mortgage companies to regulate themselves. Read all the small print and if you have a relative that is not financially illiterate offer to help advise before they commit to products like this.
5. The World’s Worst Credit Card
Every now and then, financial companies seem to bring out products which seem designed for the person who has either money to burn or is completely financially illiterate. Make sure you never get taken in for a product like this Visa ‘Aspire’ card (presumably aspiring to take as much money of the consumer as possible) Some of the many ‘Features’ of this card:
- Annual fees. $150 a year
- Monthly fee – $6.50 monthly (yes, this is in addition to the annual fee!)
- Application fee. $29 just to open the account!
- Minimum APR of 19.50%
- Initial credit limit – $300 (after opening fees annual, fees and monthly fees, you might just be able to buy yourself a calculator so you can calculate how much money will be going to the credit card company)
Continue reading →
January 22nd, 2008 — finance
Many people mis out on a potential rebate or refund because they are reluctant to write a letter of complaint. For example, in the UK, there has been an investigation into the misselling of loan insurance (payment protection insurance). It has been estimated that the insurance schemes are so profitable that the banks keep upto 80% of customers fees. The FSA has found many instances of misselling and many customers may be entitled to a refund. If that is the case, writing a letter of complaint may enable you to get a refund.
Here are some tips for writing a letter of complaint.
1. Be aware of Potential Refunds.
Banks and financial institutions often make mistakes. Salesman often fail to let you know of all the small print. If you feel you have been paying too much for a product or that bank charges are unfair; investigate whether a refund may be possible. Examples of issues which might involve claiming a refund:
- Fees increased with knowledge of customers: (Mortgage exit Fees)
- Products not Properly explained (subprime mortgages with increasing interest rates spring to mind)
- Pushy Salesman who fail to explain all details (e.g. Loan insurance is not essential to get a loan)
2. There is Nothing to Lose.
Similar to the first point, writing a polite letter to the bank is your right as a customer, don’t worry about the time or whether you are 100% right. I’m not suggesting you write for every minor problem. But, if you have been missold a product or have been charged unfairly, a simple letter of complaint may lead to a significant refund. It is a shame to miss out on this. Continue reading →
January 10th, 2008 — finance
Call centres are an unavoidable fact of modern life. They rarely offer much joy. These are some of the problems I have encountered with call centres. I’m sure our readers could add quite a few more.
1. Please choose from the following 6 options.
We could easily invent a competition – which company requires you to make the most choices before getting to speak to a human being? When I rang Virgin Media recently, I believe there were 6 different options I needed to choose before getting through to someone. It wasn’t too bad except I lost the connection and twice had to go through the procedure. Maybe it is a test of endurance – any time wasters will have given up before the right person is reached.
2. Sorry, The Computer Says No!
One of my favourite Catherine Tate characters is the office worker who invariably answers to any question – the computer says no. This is often a problem with call centres, the poor teleoperator can only follow the dictates of the computer and various rules. Alas, there is little room for common sense.
3. You will have to Speak to Someone Else
After spending 6 minutes choosing multifarious options you finally get to speak to someone. At great length you get to speak to someone, you spend several minutes explaining your problem. When it is finally explained the operator can only say – ” O you will need to write a letter to the manager / head office”
Continue reading →
November 26th, 2007 — finance
The UK banking system is highly consolidated. In theory, this makes them less vulnerable to a run on their assets. However, the recent case of Northern Rock (one of the UK’s top 5 mortgage lenders) shows that no bank is invincible. Recently, the governor of the Bank of England suggested that more Banks may be vulnerable from the recent credit crunch.
This has proved the case with first:
The below pages will need updating at the end of the credit crunch. One thing is for sure, the banking system will become much more concentrated and less competitive.
