Credit cards have become even more dangerous and even more expensive over the last few months – it’s time to ditch the unsecured debt and consolidate sensibly.

The problem is ‘personal pricing’ in the credit card market is making it very difficult for large numbers of consumers to prejudge what rate they will be offered according to Defaqto.

The company says many credit card providers now use ‘personal pricing’ where the interest rate charged is based on that individual’s details, credit record and repayment history. For those who are actually offered a credit card typically two thirds will get the best rate and up to one third will get offered a higher rate.

It’s those one-third who need to stop using unsecured debt as a means to get by right away. Those higher rates prejudged on credit score will only lead those people further down into more debts, exacerbating their problems.

David Black, banking specialist at Defaqto says: “It always used to be fairly straightforward to get a credit card but providers have become increasingly choosy about who they will lend to and, if they will lend, at what rate. Many consumers don’t even get to that stage because the number of credit card applications being rejected has shot up.”

If you are applying all over the place for expensive credit so as to pay the bills or just get through the month, stop. Talk to a professional adviser about consolidating your debts into one easy payment. It is possible to say no to unsecured debt, but only with the help of some trustworthy, sensible financial help.

SOURCE: Defaqto, 21/04/10

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Although we are technically out of the recession, millions of people in the UK are still struggling to handle their day-to-day expenses, so are still cutting back as a result.

According to Santander, 40 million people in this country are still continuing to cut back on their outgoings. It says there is has been a recent emphasis on shopping around for good deal on groceries, switching off lights and electrical items, and starting a culture of ‘make do and mend’.

Many people have had to go through the last two years with no pay rise and probably a pay cut while seeing their bills and financial responsibilities grow. This has led them to tighten their belts as far as they will go. While over half of Brits are looking around for the best grocery deals, one in five have started taking their lunch to work – people are being forced to sacrifice so as to be able to afford to pay their mortgage, their loans and their bills each month.

Helen Bierton, head of Santander current accounts says: “Forty million people are still feeling the pinch and trying to find ways of slashing their outgoings to cut back, including starting a ‘make do and mend’ culture, buying second hand goods on eBay and in charity shops, or cutting reducing household help and their childrens’ pocket money.”

One of the best ways to ease the financial burden is to consolidate existing debts into one manageable secured loan. It would give you a little bit extra each month, which would go a long way in making your life easier during these continuing tough economic times.

SOURCE: Santander, 26/03/10

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If you do not take control of your debts and take a proactive approach to your problems then you may be a slave to your debts for ten years.

According to insolvency body R3, a quarter of debt management plans will last ten years or more, even though the plans are meant to be a short-term repayment plan between an individual and their creditors.

Peter Sargent president of R3 says: “Debt plans can play an important role in offering a manageable solution to individuals who are able to pay back their debts. However, the sheer length of some plans indicates that the amount of debt these individuals have is too large – these inappropriately lengthy plans people become slaves to their debts.”

Having to bow down to debt for years is not the answer – it might mean a decade of no credit and no hope. But by consolidating your debts into one manageable secured loan you could avoid the years of pain. One low payment means room to pay off debt rather than just manage it and it means a better financial life.

Talk to a mortgage adviser about avoiding debt slavery and instead be free of your debt burdens with a sensible, manageable secured loan.

SOURCE: R3, 05/03/10

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There is no doubt about it – if you do not cover yourself against what could happen there is no guarantee that you and your family would keep your home should you get ill or even die.

New research by Friends Provident has found that nearly half of people in the UK have no insurance in place to cover loss of income through illness or death of a breadwinner and even those that have considered taking some action would be underinsured by an average of £14,500 per year.

Not being able to pay the bills means you could default on your secured loan repayments and your mortgage repayments. This could eventually lead to the lenders taking your home – all because you were not covered in the case of a loss of earnings.

Alarmingly, a third of people told Friends Provident they could live on less than 35% of their take home pay if they were unable to work through illness or injury. Based on an average weekly income of £489, that means they would have a maximum income of £171 per week – not enough to pay the bills and to be sure you and your family are safe.

Ed Stuart-Brown, head of protection sales at Friends Provident says: “Imagine being told that you had just been given a 66% cut in your income – the impact of that for most people would be catastrophic. It’s time people took control of their future and looked at this in a responsible way, instead of burying their heads in the sand, especially in today’s environment. Ignorance is not bliss, it’s irresponsible.

“It’s a sad fact of life that the unthinkable can and does happen and the last thing you would want is to leave yourself or your family in dire financial straits. And it’s too late to do anything about it once illness, accident or death occurs. If you are fit and well now is the time to act – the cost for most people is a fraction of the potential benefits they could receive and it’s a simple matter to review your needs with your adviser.”

SOURCE: Friends Provident, 02/03/10

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They have certainly gone out of fashion over the last two years, but secured loans are still a valuable, viable option for plenty of homeowners looking to safely control their debts.

A secured loan is a loan on top of your mortgage, sometimes called a second mortgage. In the past they were commonplace and many people took them out while credit was cheap and spending was easy.

But now, in the wake of the deepest recession in modern times, secured loan lending has all but stopped. Most lenders thought it too risky to offer people even more credit on top of what they already had to handle debts. Also, many people became repossessed or at least got into financial difficulties thanks to having an extra loan on top of their mortgage.

But things have changed in two years. People are much more realisitic about borrowing, less people are spending beyond their means and more people want to get serious and sensible about their debt management.

That’s why secured loans are still a viable option. There are still lenders out there who will happily lend to people who want to use the financial products to consolidate their unsecured debts and have a plan to pay off the secured loan in a timely manner.

But those lenders will only offer people a second mortgage if they have a water-tight plan. They will only lend to them if their application is impeccable and they will only lend after the borrower has spoken to a mortgage expert. In the wake of the financial crisis, the watchword is caution and safety, but if you can prove both then a secured loan lender may be happy to help you consolidate your debts and safely manage your money.

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It is not just us regular people who suffer from secured debt problems – according to the Mail on Sunday, even Conservative MPs can wind up having their homes repossessed.

The paper recently reported that one of David Cameron’s rising stars had her house repossessed over an unsettled debt of £324,000. Adeela Shafi opened the 2008 party conference and tipped to be an important MP if the Conservatives came into power this year.

But that did not stop her mortgage lender seeking a county court judgement over £324,000 owed by her after she missed mortgage payments. This led to a judge deciding that the home had to be repossessed. But her miseries didn’t end there – the paper says that the property had to be sold for a knockdown price of £250,000 and now Shafi is liable for the remaining £74,000.

This tale highlights two things – one, if you do not keep up repayments on your debts then you can lose your home, whoever you are. And two, if you get into serious difficulty and receive court judgments then you need to find some expert help fast to stop the courts taking your home.

If you are struggling with your mortgage or any other secured debt, talk to a financial professional before you lose your home. It doesn’t matter who you are or what job you have, defaulting on your debts is a serious issue.

SOURCE: Mail on Sunday, 06/02/10

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A consumer debt charity has warned that more and more Brits are falling into insolvency because they cannot handle their secured and unsecured debts.

The Consumer Credit Counselling Service recommended insolvency to 39,663 of its clients – that’s an annual increase of 93% in overall insolvency recommendations.

More than 20,000 people came to the charity and were recommended bankruptcy, nearly 12,000 were recommended Individual Voluntary Agreements and more than 7,000 offered debt relief orders in the last 12 months.

Delroy Corinaldi, CCCS director of external affairs says: “Although there has recently been positive signs in the economy, our figures highlight the high numbers of people with unmanageable debt, for which insolvency is the most appropriate solution.”

There is no doubt that those people who came to the CCCS were in need of an insolvency, but it needn’t get that far. Insolvencies are literally the last throw of the dice and are very difficult to come back from. Between that first red letter through the letter box and insolvency there are a world of options to consider.

If you are struggling with your secured and unsecured debts, talk to a mortgage adviser about those options before you run out of them.

SOURCE: CCCS, 04/02/10

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Experts have warned that store cards and credit cards are not offering borrowers a good deal and are designed to encourage overspending rather than sensible money management.

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

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You may be able to handle all your secured debts without any risk of defaulting but would your family be able to cope with the debt responsibility without your income?

The average household with dependent children has £91,648 still outstanding on their mortgage now compared to £88,500 last year, according to Scottish Widows. And when it comes to short term debt, the average household with dependent children has carried over £8,653 over the last three months.

These debts may not be huge and are certainly manageable with a good income, but what happens if you get sick for a long time? Or what happens if you are involved in an accident, need surgery or have to care for a sick family member? What happens if you die? Could your family take on the long and short term debt alone?

Millions of households are leaving themselves at risk of being unable to survive financially if one of the bread winners become unable to work – but Scottish Widows says 62% of Brits have not protected themselves for the long term should the worst happen and they lose their household’s main income.

Clive Allison, protection director at Scottish Widows, says: “Nearly half of families with dependent children now rely on two incomes to maintain a decent standard of living, and as our stats show, this isn’t likely to ease off any time soon. For many families, sacrificing half their income when they have children is a luxury they just can’t afford.

“People are leaving themselves exposed to a lack of income should anything happen to the main breadwinner, and large personal debt to repay on top of this could make things even more difficult. Families need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones.”

SOURCE: Scottish Widows, 18/01/10

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You have probably spent the last year doing all you can to help solve your secured loan problems – but if you want to be successful you need to make another New Year’s resolution to once again work hard at saving and clearing debt.

But too many people think their problems will just go away now they have spent a year being financially sensible – Gocompare.com says that while money matters topped 60% of peoples’ resolution lists last year, only 37% will resolve to sort out their finances and pay off debts in 2010.

Lee Griffin, business development director at Gocompare.com says: “The credit crunch ensured that everyone was thinking about money this time last year. It gave people a jolt and got us thinking about how we could save money. I doubt very much that everybody has got their finances in order, so resolving to cut outgoings and shop around more are still likely to be good resolutions this year too.”

So people who have debt problems need to persevere and make some more promises to themselves for the next 12 months. New resolutions could include saving money on outgoings, getting out of debt or reducing loan and credit card costs, putting more into a savings account or even shopping around for the best financial products like insurance and mortgages.

The key to getting out of debt is perseverance. But we all know reducing debt is tough, so get some help in making your resolutions stick. Talk to a professional financial adviser about putting together a new 2010 plan of action – a good plan alongside some professional advice can go a long way in making sure your 2010 financial resolutions work.

SOURCE: Gocompare.com, 30/12/09

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