Abacus Daily Debt News

Not being able to pay off debts is one of the top financial fears facing Brits this year, according to new research from MoneySupermarket.

The price comparison site discovered 11 per cent of respondents to its survey are concerned about debt repayment, meaning it is a greater concern than rising transport costs (seven per cent), no pay rise or bonus (seven per cent) and the inability to cover monthly rent and mortgage costs (four per cent).

Some 43 per cent of consumers cited rising utility bills as their biggest worry, placing this issue top of the list, while increasing food and petrol charges came in second and third places with 34 per cent and 33 per cent respectively.

Clare Francis, consumer finance expert at MoneySupermarket, said: "With uncertainty in the jobs market and household expenditure still high, it is important to have money to fall back on should your circumstances change."

The news comes in the same week Prudential revealed almost one-fifth of Brits will retire in debt during 2012.

By Joe White

The controversial plan to cap benefits has been defeated in the House of Lords but the government has vowed to fight on in attempting to get the legislation approved.

A bishop's amendment that child benefits should not be included in the £26,000 per year cap was supported by crossbench, Labour and Liberal Democrat peers by 252 votes to 237.

Gillian Guy, chief executive at national charity Citizens Advice, warned that if the bill passes it will have a "disproportionate impact" on some of the country's most vulnerable families.

If such a comment is justified, it may particularly impact on those struggling with debt.

Children, breadwinners who have lost their jobs and people who cannot work due to illness are among those who would be hit by the proposed cap, she said.

Ms Guy acknowledged the coalition is right to attempt to simplify the "complex" benefits system, but stressed certain safeguards must be put in place.

Without these, she warned: "The combined impact of these sweeping welfare reforms and huge cuts will be catastrophic for a lot of families already stretched to the limit."

By Amy White

Homeowners struggling to pay off debt and potentially facing difficulties with their mortgage repayments might be left facing further financial strain as home insurance premiums increase this year.

Such a development has been predicted by John Portwood, personal lines insurance broker at Portwood & Co.

He said upgrading in line with inflation will be one cause of the increase, but said the economic downturn may also have the effect of pushing premiums up.

"With the recession there are probably more fraudulent insurance applications - especially over the internet - and claims," Mr Portwood stated, noting insurers will have to factor this in due to the extra costs such actions incur.

However, the broker noted, people need to remember their home is "their largest single investment" and that the cost of insurance is less important than ensuring they are covered for major problems.

Recent research by Confused.com indicated motorists were most likely to face substantial increases in car insurance costs if they lived in the north of England last year, with Bradford seeing the highest average premium rise at 17.1 per cent.

By James Francis

UK unemployment has risen again, which could leave many more people struggling to pay off their credit card debts and other borrowing.

Official figures published today (January 18th) by the Office for National Statistics have revealed the number out of work rose by 118,000 in the three months to November 2011, increasing from 8.1 per cent of the working population to 8.4 per cent, or 2.68 million.

This was the highest level of joblessness since the mid-1990s and the headline figure may be just one sign of the problems consumers face.

Another issue is that while the number in full-time work fell by 57,000, the total in part-time jobs rose, which could mean many are not unemployed but are working less and therefore have a smaller income with which to pay their bills - including debt repayments.

Those shedding jobs in the months ahead could include small firms, with a poll by the Federation of Small Businesses published this week showing 6.5 per cent of them expect to lay staff off in 2012.

By James Francis

Concern has been raised over how much regulation of overdraft debt is being imposed on banks, as a new authority takes over the role of keeping financial institutions in line.

Consumer group Which? has said a key issue is that unauthorised overdraft charges are too complicated for people to be able to compare between those implemented by different banks.

It noted that its sample group - including a maths PHD student - were only able to correctly calculate the figure on seven out of 48 occasions when presented with bank statements.

Launching its "Watchdog not Lapdog" campaign, Which? called for the new Financial Conduct Authority to crack down on banks and rule against such complexity.

Which? Chairman Peter Vicary-Smith said the government has so far failed in its pledge to tackle this issue, commenting: "It's extremely disappointing to find that bank charges are still too high, too complex and impossible to compare."

Responding to the call by Which?, the British Bankers Association argued that most consumers do not go into unauthorised overdrafts anyway, adding that its members allow more buffer zones at the limits of overdrafts and often contact customers when the balance is close to the line.

By Amy White

Those with credit card debt may find they need extra help if they are unable to switch to a cheaper account.

With large balances having been built up by many ahead of Christmas, January is a time when a lot of consumers will seek to get their debts under control and MoneySupermarket.com has sated that those who switch to a zero per cent card can save hundreds of pounds.

Head of loans and debt at the site Tim Moss said: "Moving onto a zero per cent interest product is a no brainer - it allows you to pay off your existing balance over time without accruing additional interest."

However, some who are in debt may find they are turned down for a card, not least if they have missed payments on their existing account and have thus harmed their credit rating.

In such instances, struggling consumers may find a debt management plan is the best way forward - or even an individual voluntary arrangement if the debt is over £15,000 and unmanageable.

According to Credit Action's latest figures, total UK personal debt stood at £1.451 trillion at the end of November 2011.

By James Francis

Citizens Advice has welcomed news that EDF Energy is cutting its gas tariffs, but has noted many people are still in fuel debt as they struggle to keep up with rising bills.

Commenting on the situation, the charity's chef executive Gillian Guy said: "Hopefully EDF's move will kick-start a price cutting trend among energy companies."

She added that Citizens Advice will be holding seminar's on the subject of fuel debt to coincide with Big Energy Week (January 16th to 21st), including a seminar in London attended by energy secretary Chris Huhne.

During the week there will also be events in Cardiff - with Welsh Assembly minister for energy John Griffiths present - and Edinburgh.

The difficulty in meeting fuel bills has grown due to average hikes of 14 per cent last year and Confused.com's energy analyst Lisa Greenfield said that in view of this, EDF's cut "might not seem significant enough to their customers".

By Joe White
 

Consumers struggling with their debt may find a bit of financial relief is on the way as EDF Energy announced it is to trim its gas prices by five per cent from February 7th.

The move follows the recent announcements by Co-operative Energy and OVO Energy of price cuts due to falls in wholesale prices, with this being the first move by one of the big six providers.

And EDF noted that this comes after it was the last of the six to announce a large increase last year.

The news was welcomed by price comparison sites, with site editor at MoneySupermarket.com Clare Francis calling it a "welcome boost" for consumers.

But uSwitch director of consumer policy Ann Robinson said there is no cause for rejoicing just yet.

"Look through the fizz and the bubbles and we're left with the cold reality that prices are still substantially higher than they were just over a year ago," she noted.

By Amy White

Debt levels may be worst for families living in inner-city areas of London, according to a new child poverty map of Britain.

This is because the Campaign to End Child Poverty - run by the Child Poverty Section Group - has published a map of the problem in the UK and the worst-hit parliamentary constituency is Bethnal Green and Bow in the east of the capital.

In this area, 51 per cent of children live in poverty and four other London seats are in the top ten.

The remainder of the list is made up by inner-city seats elsewhere, in Manchester, Liverpool, Belfast and two seats in Birmingham.

In addition to this, six of the top ten boroughs for child poverty are in London.  

Executive director of the campaign Alison Garnham noted only 89 seats meet the target for less than ten per cent child poverty - including prime minister David Cameron's Witney constituency.

Chief executive of The Family and Parenting Institute Dr Katherine Rake recently argued that families with young children are disproportionately harmed by recent tax and benefit cuts.

By James Francis
 

Employees at outdoor retailer Blacks may be among the luckier ones as a number of company insolvencies could be set to leave consumers without jobs and unable to pay off their debts.

Rival firm JD Sports has confirmed it is in talks to take over the ailing company, which has gone into administration and recently declared its shares to be effectively worthless.

Any deal could help prevent a bankruptcy that may have led to widespread job losses, but while some may be fortunate, other companies cmight be going bust or shedding staff as the economy continues to struggle and might go back into recession.

Those who do find their incomes fall due to a lost job may wish to consider a debt management plan to spread the cost of repayments more.

Last week, a BBC poll found 25 out of 27 economists predicting Europe will go into recession this year, a situation that could push the UK back into a contraction as export orders from the continent decline.

By James Francis