In Feb 98 the bank rate was  7.25% average cc rates were 21.1% – Difference = 13.85

In Feb 2005 bank rate was 4.75% average cc rates were 15.2% -    Difference =  10.45

Feb 2010 bank rate is 0.5% and average credit card rates are 18.8% – Difference = 18.3%

The report shows that 2006 was the cheapest time to have debt on credit cards when compared to the official bank rate with a difference of 10.3%  but now, just a few years on, everything has changed.
The excuse given by the credit card suppliers is that they are having to manage a very significant number of defaults by customers but it seems that they bring a lot of that on themselves by making customers stick to the required repayment plans rather than allowing some flexibility to help their customers manage the repayments.

While they claim to be willing to help customers, they seem all too ready to turn over the debt to a debt collection company for pennies in the pound and arguably they are the cause of the losses they suffer because they are so eager to ditch the debt at any price. The majority of people do want to repay their debts but when times are hard and they find it difficult to keep up with the payments they previously easily managed they get little help from the credit card companies.
Raising interest rates on these debts does not make it any easier for these people to repay their debts. It actually makes it far less likely they will be able to pay. When your credit record starts to deteriorate like this everything becomes more expensive. Your costs rise and you have even less money available to repay debts.

If you are struggling to repay debts then it is likely your bank account will have a few items going unpaid in which case your bank will enthusiastically attempt to make your financial situation far worse by removing a couple of hundred pounds from your account every month before you even begin to try to pay your bills thanks to their clever people who come up with yet more interesting ways to justify taking your money from your bank account.

Note to self – Idea for a bumper sticker.  ‘Criminals do it with knives and guns, Bankers to it with pieces of paper.’  Might be a little long. Maybe shorten it to ‘Bankers have no morals’

Lessons must be learned from our experiences over the last couple of years and for credit card companies it must surely be that their business model was flawed. The idea that you can fight to lend money to people and go to any lengths to increase your customer numbers forgot about the fact that times change as do financial circumstances. Maybe that model made sense in 2000 to 2006 but what planning had been done for when times were bad. It’s not as though we had never had recessions before.

Perhaps they were too naive and they believed the then chancellor when he said, “No more Boom and Bust” They clearly imagined there was a gravy train that could be milked long into the future though there were plenty of less clever, less well paid and less experienced ordinary people who were saying the buy now and pay tomorrow culture could not survive much longer.

If credit card companies really do worry about defaults they need to do more to help their customers avoid financial ruin and find a way to repay their debts. While raising interest rates on customers whose credit rating is sliding probably makes lots of sense when you look at the figures in a plush head office in London, the reality is that it leads to devestated lives and defaulting customers out there in the real world.

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Something clearly needs to be done to reduce the numbers of people having to resort to insolvency. Whether it is careless borrowing,careless lending or simply bad luck and unfortunate changes in circumstances such as illness, death and divorce, for every individual counted in these statistics there will usually be a family attached.

There will be a period of possibly years of stress, financial struggles and health problems brought on by the stressful situation they find themselves in. Marriages will have collapsed, individuals will have turned to drink or drugs to blot out the problems and ultimately public resources will need to be the providers of homes and other support. Everybody loses in this. The creditor , the individual bankrupted and their family. We surely have to be able to provide a better way.

Supporting The Bankers

The government felt obliged to support the Bankers and the cost of this action is something we are only now beginning to see and start to understand. If the government had helped individuals, who are after all their employers, by even a tenth as much, the country would be more active, there would be more jobs and more people would be able to enjoy their lives rather than struggle to feed their children and heat their homes.

Meanwhile, according to the British Bankers Association £63.5 Billion of credit card debt is owed by UK consumers but the total cost of the bank bailouts in the UK has been estimated to be a massive £850 Billion by the National Audit Office.

The Bank of England has manufactured £200 Billion of virtual money by the process known as quantative easing. This would be enough to pay off the credit card debts of the nation three times over, but it has been used in a way that benefits the financial industry and the City of London, enabling bankers to make a lot of money and enjoy their huge bonuses. It remains to be seen what, if any, effect this has had on individual citizens of the country other than the fact we have to pay for it.

If the govenment and/or the Bank Of England had chosen to provide every adult in the country with a voucher that could only be used for the purchase or repayment of financial products, i.e. pensions, mortgage repayment, credit card repayments in a system rather like the child trust fund payments they could have given each and every one of us around £6,000.

All of that money would have gone straight into the financial services industry so they would still have benefitted from all this extra cash. The whole country would be feeling better off with fewer debt problems and boosted pensions helping protect them, their families and the country in the future. Business would be more active with more consumers able to afford to spend in the shops, employment would have been boosted by the additional activity which would boost the tax revenues for the government and the health service would have fewer stress related patients to deal with. Everyone would benefit.

Instead of which we are all poorer thanks to the debt, we face the prospect of a decade of austerity and higher taxes, whichever government is returned to power after the election. Meanwhile the financial industry continues to do well and pay themselves handsomely. It would seem that the only people who have benefitted from the financial crisis are the people who caused it in the first place.

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“Mass marketed scams are a problem in the UK. They can take the form of bogus and fraudulent offers sent by post, telephone or email. Fake lottery and prize draw wins, bogus psychic predictions, get-rich-quick investment cons and ‘miracle’ health cures are just some of the tricks used by scammers. Nearly half of the UK adult population has been targeted by a scam, and more than three million adults – one in 15 people – fall victim to scams, losing a total of £3.5 billion every year.”

Three million adults fallen victim to scams? That is staggering. No wonder these scams are such big business these days but perhaps we shouldn’t be surprised.

There was a time when anyone involved in the financial and investment businesses was a respected person or company and reputation was everything but times have changed and business these days operates in a similar way to the way the scams do.

For example. You get a phone call claiming to be from a credit card company and straight away they are asking you to give them information to prove who you are. Surely it is they who should be expected to prove who they are when they ring you like that?

So, when someone phones up supposedly from a company you previously had some dealings with you may be puzzled but it is human nature to give them the benefit of the doubt. It has become the norm for any business to push there products at you these days. Not content with you deciding for yourself that you want to use their services every business from your bank to your mobile phone company to BT will try to push you into choosing their service and/or additional services.

So the scammers do not seem that unusual when they phone you unexpectedly and offer you a perfectly reasonable sounding explanation of who they are and what they are offering. They sound very similar to these other legitimate companies promoting their services. Perhaps this goes some way to explaining how come so many people have been scammed.

The OFT are trying to make people more aware of the risks of scams and the Scamnesty campaign is part of the OFT’s ongoing work to build awareness of scams. Among their promotions is the option to give them your scam emails and postal mail. From mid-January there will be Scamnesty pages on Consumer Direct which will be fully Scamnesty branded and include an e-bin for email scams and a postal bin locator. This will allow people to search for their nearest Scamnesty bins by postcode.

So now you know what to do with all those junk emails and dubious offers you receive in the mail. The basic rule must be to be automatically suspicious of anything you are not expecting and have not requested. If your credit card company phones you up you can always tell them you will ring them back and dial the number on your credit card statement.

The same applies to any other financial or investment company that calls you but if it is a company who you don’t recall dealing with before be extremely cautious. If what they say sounds interesting ask them to send something in writing. If they ask for your address be extra vigilant since they claim you had some previous dealing s with them. Not that having an address means anything these days since they are easily obtained.

When you get emails claiming to be from your bank and telling you that security has been compromised/updated or they are checking security of accounts just delete them and never open attachments on such emails as they may well contain trojans, adware, viruses and other dubious pieces of automatic software that can take over your computer or copy everything that you type.

It is a sad fact that these days anyone in the world can set up a scam and appear to be someone local to you but if we remain vigilant we can hopefully avoid the worst of the problems they present. Finally if ever you are tempted to invest thousands of pounds with someone who phones you up out of the blue just stop and think for a minute.

If it sounds too good to be true then it probably is and you should run away. It would be sensible to discus with a registered qualified financial advisor any investment you are considering but most especially if this is the result of a phone call from someone you have no reason to trust.

You can read more about scams and how they operate at the OFT website by CLICKING HERE

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We all enjoy getting something for nothing and for those of us who need to count the pennies an offer where you can buy one item and get another free is very appealing, not least because it can help families make their household budget go further.

One of the problems with this type of special offer has been that by the time you get around to using your free item it may be past its sell by date. So, in a response to this problem Tesco have been running a trial which changes the usual way these deals operate. Instead of having to take both products at the same time you will be given a voucher that entitles you to get your free item the next week when you visit the store.

The trial was to run for two weeks in selected stores and customers choosing pineapple, melon, salad and lettuce offers are able to claim their free product the following week.

Tesco say they will await the results of the trial to see what customer feedback they get but I would expect to see that customers would like this a lot. It would maintain customer loyalty for the individual store since you are more likely to return to the store the following week to get your free product rather than visit the rival stores. Another big benefit of such a scheme is that far less foods will be thrown away unused because it has gone over the sell-by date. So, everybody wins.

It will be interesting to see what develops but it sounds like a great scheme and I would hope this will be rolled out nationally very soon.

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For many people their home is their largest, perhaps only, investment and to raise money to enjoy a better lifestyle they might be tempted to sell their home. Most people would prefer to stay where they are so the idea that you could sell your home yet continue to live there as a rent payer is appealing.

Unfortunately there have been lots of cases where this process has been widely abused. The homes are usually purchased at a significant discount from the market value which has tempted some unscrupulous purchasers to evict their new tenant as soon as they can so the house can be sold at a considerable profit while other cases have been reported where the tenant has been evicted by the new mortgage holder after the buyer has failed to make the payments on their mortgage.

People who had been promised that they could remain in their home for the rest of their lives have found themselves evicted within a year or eighteen months and something clearly needed to be done about this.

Now the Financial Services Authority (FSA) have announced new rules on these types of transactions.
The FSA has:-

* banned exploitative advertising and high-pressure sales techniques and prohibited the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature;

* introduced a 14 day cooling-off period to give consumers more time to make decisions on sale and rent back;

* banned cold calling and prohibited firms from dropping promotional leaflets through letter boxes;

* confirmed rules to ensure consumers have a security of tenure for a minimum of five years;

* introduced an affordability and appropriateness check across all sales to check that the sale and rent back deal is right for the consumer; and

* put in place measures to ensure all risks are clearly signposted to the customer, via FSA literature and during the sales process.

Security of tenure for 5 years is better than nothing but if you sell and rent back on the assumption you can remain in your home for the rest of your life 5 years doesn’t sound so much. It is, however, a very positive thing that the FSA are acting to curb some of the excesses that have grown up within this industry.

The FSA have also made it compulsory for firms engaged in home sale and rent back to be licenced. All firms active in the sale and rent back market must be authorised otherwise they face potential fines or imprisonment. The FSA is proactively monitoring the SRB market for unauthorised activity, and will take action if necessary.

Consumers should ensure that they only deal with authorised firms and be aware of the risks involved in sale and rent back schemes. Consumers are encouraged to call 0300 500 5000 immediately if they are aware of sale and rent back firms who continue to trade without being authorised.

You can find out more about Home Sale And Rent Back  by <clicking here>

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