Buy One Get One Free – Next Week
Tesco have been trialing a system that changes the accepted way of operating a buy-one-get-one-free offer (BOGOF).
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.
Positive News On Homes Sale And Rent Back
There is some positive news on the homes sale and rent back market. This is where a householder sells their property to a buyer on the understanding that they can remain in their home and rent it from the new owner. This has been a growing market in recent years and it is easy to understand why that would be.
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>
Credit Card Consultation – Have Your Say
Kevin Brennan, Minister for consumer affairs feels the balance between credit card providers and the customers who use them may have got a little uneven. Few would disagree with that.
For the past few months there has been a consultation taking place which you can read about at www.bis.gov.uk/creditconsultation
The consultation is now closed but if you feel nobody consulted you then you can still leave comments on the site if you feel you have something to contribute on the matter.
(Why is the usual government way is to only ask organisations who benefit from, or those organisations opposed to, any proposals while apparently ignoring the consumers themselves? Surely the main focus should be on asking the consumers, the electorate, what they think?) The comments section on the website is an opportunity to put your point of view though how much weight it carries, goodness only knows. We know we have a government that doesn’t listen to people but they might pretend to now with an election looming.
The subjects up for consultation were:=
Allocation of payments – with lower interest debt being paid off first
Minimum Payments – whether minimum payment requirements should be increased
Unsolicited Credit Limit Increases – Card limits increased without consent
Re-pricing of existing debt – Increasing the interest rates without proper explanation (or justification)
Simplicity And Transparency – Making it clear what the costs are on credit cards
There are literaly hundreds of comments. Many pointing out that whilst increasing minimum repayment requirements on credit cards is a good idea in principle, the practical affect would be to push many people into bankruptcy. Hopefully this is not what the government wants and they will resist the temptation to simply increase the minimum payments on existing credit card accounts. It would make a lot of sense to increase the minimum repayments on any new credit card accounts and that way people would be better prepared and better able to deal with their repayments.
The fundamental problem we have with credit cards is that many of us use them in ways they were never designed to be used. Credit cards are a flexible credit facility and are very useful to use if the car suddenly needs repairing or the boiler breaks down. They are perfect for dealing with those sudden and unexpected expenses but they need to be repaid fairly quickly or they become a very expensive debt.
The fact that they are so expensive to use and very profitable for credit card companies has led to those companies to encouraging us to use them more and more. Credit cards are now part of our everyday lives and people have been encouraged to use them for their everyday spending.
Consumers have been misled by advertising which suggested that the purchase of a carpet whilst on holiday using your credit card made perfect sense. It might be a convenient way to deal with the currency issues but that carpet is probably still being paid for ten years later.
If you fancy an interesting little financial challenge I suggest you work out how much your credit card costs you if you make the minimum repayments. You can set up a spreadsheet very easily and enter the amount of your credit card debt. Just calculate the interest each month and delete the minimum payment.
The results will, I am sure, shock you. Paying the minimum amount keeps the debt going for decades and the money the credit card company makes in interest is astronomical.
There is no question consumers have been taken advantage of by the credit card companies. Rather than being happy to offer a flexible credit facility the providers have done their best to get consumers deeper and deeper into debt. The real purpose of those cheap credit transfers we all love to use has been to maintain your current debt at high interest rates while you pay off the lower interest rates first and oh, so slowly. The companies have been coining money faster than the Royal Mint.
Now I am not saying the the credit card companies are doing anything illegal as unfortunately the law allows all sorts of practices that we might think should be illegal. If you are a legitimate legally registered money lender it seems you can do just about anything you like and the only people who grumble are the people who owe you money and they can’t do anything about it.
If you decide to jack up interest rates from say 6.9 to 19% to 25% to 35% you can. Nobody is going to stop you so why not? It may seem immoral to charge 50 times the official bank rate but it is not illegal. The Mafia would probably charge you less, though their collection methods are a little more aggressive than the credit card companies.
If you have been on the receiving end of credit card companies debt collection calls you might wonder about that. The constant phone calls and demands for payment can take a terrible toll on people’s health and mental condition. It is slow torture as you struggle to make whatever payments you can and go without food and heating in an attempt to meet your repayments and after all that you then get hit with additional charges for late payment or missed payments even though you later did indeed make the payment so it was not missed.
The credit card companies are obviously entitled to make a profit and credit cards are a useful financial tool if used for their proper purpose but the greed of the credit card companies shows that, just like the banks, they do not care. They do not care about consumers. They do not care about customers and they certainly couldn’t care less what happens to the country. The will quite happily encourage everyone to get deeper and deeper into debt so long as that makes them money. They don’t care about whether you can afford to eat or heat your home.
Your ‘flexible friend’ is the potential enemy you keep in your wallet. Yes they can be helpful if kept within certain limits and used for their correct purpose but allow them to become a part of the way you live your daily life they could destroy you and your family and everything you have worked for.
If you want to leave comments on the government website you can do so here… http://www.bis.gov.uk/comments-on-credit-consultation
