Website Moneyfacts.co.uk is calling for more transparency and control of credit and store cards and has even gone to the Government to call for a better deal for consumers on credit and store cards.

Samantha Owens, principal consultant for banking and economic insight at Moneyfacts, says: “Credit cards form an integral part of the financial services industry and allow customers to transact with convenience, reassurance of safety and added consumer protection. But credit cards also come with the risk of a greater temptation to overspend. It is one of the most expensive forms of credit and has little or no structured repayment mechanism.”

Moneyfacts says there is a real problem with customers’ understanding and while more can be done to educate credit card users. People are too quick to take on unsecured credit without being aware of the consequences.

The website is right – easy unsecured debt encourages people to spend without teaching them the consequences. While a carefully managed credit card can be to your advantage and can be a useful way of making the most of your money, it is easily misused and will get you into debt trouble quickly.

If you are worried about your unsecured lending there are secured options out there to help you. Talk to a financial adviser about what you can do to steer clear to unsecured credit and improve your finances securely and sensibly.

SOURCE: Moneyfacts, 21/01/10

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog

Taking money from a credit card is getting even more expensive, according to uSwitch.com – in 2005, the average APR for cash withdrawal fees was 21.22% APR, this has increased by 41% to 29.97%, costing consumers up to £161m a year in interest

Also balance transfer fees are still rising – the website found these fees have soared from an average of £49.66 to £54.09 – with 7.8 million balance transfers carried out each year this costs consumers £422m.

In total, moving money with credit cards will cost consumers a whopping £864m over the next 12 months alone – if you are relying on moving unsecured money about then you need to talk to a mortgage adviser and seek out a cheaper alternative.

Using secured finance instead of a credit card will save you a fortune every month. Consolidating debt, financing a business or a home or even freeing up a bit more cash can be more safely and more cheaply with your home’s equity, either through a secured loan or a remortgage.

Unsecured finance will always end up costing you dear – secure your money and start saving and stop spending.

SOURCE: uSwitch.com, 13/07/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

Credit card cheques have wreaked havoc with the finances of unsuspecting credit card customers for years. One of the big problems has been that people who are under pressure have seen a credit card cheque as an easy way of boosting their bank balance and to buy themselves some breathing space, even if just for a couple of months. Many indebted people have also been using the cheques to make the minimum payment on another card as they continue to juggle an ever increasing pile of debt.

Andrew Hagger of Moneynet.co.uk says people have been unfortunately merely delaying the inevitable and eventually running out of credit, and are then faced with a far larger pile of debt.

He says: “Whilst a credit card cheque may offer a short term fix, it comes at a hefty price. A £500 cheque can easily spiral by an additional £150 in fees and interest in just 12 months. Sending these cheques to people with little financial discipline or will power is akin to posting candy through a school letterbox.

“These cheques are only part of a much larger indebtedness problem in the UK, we need to tackle the individual components, no matter how small, if we are to make a difference.”

Louise Bond, personal finance expert at uSwitch.com, says: “Sending out unsolicited credit card cheques has long since been an act of complete irresponsibility on the part of providers, and finally we have less talk and more action in bringing about an end to this practice.”

Bond says that last year alone, more than 14.1 million UK consumers were sent more than 280 million credit card cheques – 97% of which were unsolicited. She also says that 3.2 million of these cheques were used by consumers spending a staggering £3.6bn. In total, providers a pocketed £571m in handling fees and interest.

Bond adds: “Providers have been capitalising on the lack of understanding amongst consumers around hefty fees associated with this form of credit, which has resulted in the active encouragement of consumers to view them as ‘friendly-freebies’ or a quick fix solution to cash flow problems, and not, as they should be regarded, as a last resort.”

SOURCE: Moneynet.co.uk, uSwitch.com, 02/07/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.

Research from uSwitch.com has shown that 7.3 million, or around a fifth of credit card customers use this facility around five times a year, making average withdrawals of just under £100 every time. These consumers make a total of 38 million withdrawals every year, racking up £161m in interest charges alone.

On average the per annum rate applied to cash withdrawals on credit cards has increased by 3.05% in the last two years, from 23.65% to 26.7% today. Across the industry, charges for this facility vary and in the last year alone, some providers have increased this rate by as much as 4%.

Louise Bond, personal finance manager at uSwitch.com says: “We strongly advise customers not to use this facility on any credit card unless they are really desperate for the cash. Interest is applied to credit card cash withdrawals from the day they are made and the APR is generally far higher than that applied to purchases.”

This illustrates perfectly why you need to always be thinking about managing your money. Taking money off of your credit card should only be done in an emergency, otherwise your credit card bills are going to soar exponentially. And those with larger credit card balances will carry on being hit, as cash goes to the ‘bottom of the pile’, meaning you pay the higher rate on the withdrawn amount until you can pay all the balance off.

So do what you can to limit unnecessary unsecured payments, and try and keep your credit usage to a minimum. The only way to clear debt and move forward is to make sure you are paying as little as you can for you, whenever you can.

SOURCE: Uswitch.com, 23/04/09

To keep up with the latest news and comments on current financial affairs please visit the Secured Loan Blog.