Abacus Daily Debt News

There is a danger that debt management problems could increase due to buy now, pay later deals, Credit Action’s director has suggested.

Chris Tapp said that difficulties can obviously arise when people are paying for items in installments, particularly those on lower incomes.

"There could be some problems with people struggling to make these types of repayments, so there is always that risk," he explained.

Mr Tapp recommended that people getting into debt through deals such as this speak to the company with which the agreement was made.

He claimed it is important to explain exactly what the problem is so alternative arrangements can be looked at, but advised that in instances where people feel they have been treated unfairly, they can turn to the Financial Services Ombudsman or the Office of Fair Trading as well.

Earlier this month, his organisation revealed that 7,241 new debt problems are being dealt with by the Citizens Advice Bureau every day.

By Chris Trimble

Britons have been borrowing less money over the last year, statistics from the Finance and Leasing Association (FLA) have confirmed.

Overall lending for the year ending in March experienced a 13 per cent decline - with a total of £58 million being provided.

Secured loans dropped by 67 per cent, although credit card debt could still be a problem for many consumers as this form of finance saw only a three per cent fall.

Head of research and chief economist at the FLA Geraldine Kelly explained that loans are being affected by the providers’ difficulties in accessing funds themselves.

"Overall, consumer finance is still being hit by the downturn," she said, adding: "With a depressed housing market many people are choosing to improve their homes and replace furnishings rather than move house."

Earlier this month, the organisation noted that lenders have been working with borrowers in order to minimise repossessions, with figures for the first quarter of the year similar to the same period in 2008.

The average person in the UK will owe two per cent more in debt than they earn a year, new figures have shown.

Confused.com found that for every £1 earned over the course of a year, a consumer will be in arrears to the tune of £1.02.

Manchester was one of the places where the debt-to-salary ratio was at its lowest, with 51 per cent of annual wages owed to creditors.

Meanwhile, people living in Kingston-Upon-Thames had debts worth 169 per cent of their yearly income.

Gemma Stanbury, the website’s head of savings, loans and debt, said that as the economic downturn continues, people need to "become more aware" of their outgoings.

"Where spend and debt can be reduced, efforts should be made to ensure it is done," she remarked.

Debt issues were the subject of 1.76 million enquiries received by the Citizens Advice Bureau in 2008, the organisation revealed earlier this month.

By Chris Trimble

Consumers who are worried about their debts can help to alleviate stress by drawing up an action strategy, according to one expert.

The Independent quoted Philip Pearson of P&P Investment as suggesting careful planning is the best method to ease debt problems.

Commenting on a student owing £16,000 on credit cards and loans, he remarked: "The most effective way of reducing debt anxiety is to draw up an action plan."

His assertion was backed up by DebtWizard.com head Mike Thomas, who advised that the man in question, Faze Al, explain his position as a student with no job or assets to his creditors and request a moratorium.

Another expert, Darius McDermott, said that bankruptcy is an option for Mr Al, but warned that this is not something that anybody should go into without fully understanding all the potential consequences.

Mr Al is part of a growing number of people living in Britain who are aiming to become debt free.

Last week, Equifax’s Neil Munroe stated that consumers are increasingly trying to clear their debts due to economic uncertainty.

By Chris Trimble

Inflation has been falling, but the British public still may not be encouraged to spend, it has been noted.

Charles Davis, an economist at the centre for economics and business research, said that although goods and services are getting cheaper, consumers are being affected by the recession and will remain subdued.

However, he stated that the falls in the cost of living may come as a "boon" to the UK population, particularly if people can manage to stay in employment.

"If you have a more steady income, like a civil servant for example, you will tend to benefit," Mr Davis revealed.

But he explained that this will not necessarily turn into a rise in spending, commenting: "You also have to factor in rising unemployment and uncertainty about the economic outlook."

The latest figures from the Office for National Statistics showed that consumer prices index annual inflation slowed from 2.9 per cent in March to 2.3 per cent in April.

Electricity and gas bills were a large downward pressure on the data, the organisation said.

By Jamie Price

People living in rented accommodation are often charged excessive amounts of money by lettings agents, a new report has found.

Research carried out by Citizens Advice discovered that 94 per cent of agents have imposed up to seven additional charges on tenants above those usually associated with renting out a property.

These can add up to a total of £600, the charity warned, stating that tenants are being "badly let down" by the rental system.

Costs that can be imposed on people include non-returnable holding deposits, reference check charges, inventory expenses, tenancy renewal fees and administration charges.

David Harker, chief executive of Citizens Advice, noted that these costs can create "a huge barrier for people on low and even average incomes".

He called upon the government to bring in extra regulations for lettings agents.

It comes following the publication of the Rugg review, which revealed that vulnerable groups can sometimes be exploited by landlords.

By Jamie Price

British consumers are struggling to build up cash as they try to cope with the effects of the credit crunch, a survey has suggested.

Figures from Abbey Savings have shown that on average, UK adults are putting away £120 a month, a fall of £43 compared to three months ago.

In addition, this figure is £315 less than that seen a year ago, with 21 per cent of the population saving less than they did in 2008.

However, the poll indicated that many people intend to tackle this situation, with 25 per cent stating they are planning to increase the amount of cash they save over the next three to six months.

Spokesperson Reza Attar-Zadeh urged savers to implement a plan of action when building up their funds, noting that many may be saving "for a specific purpose, such as a holiday or a wedding, or for emergencies".

Recent figures from National Savings & Investment showed that a third (32 per cent) of Britons do not have any cash set aside for emergency situations.

By Jamie Price

Many people have been changing their spending habits in the wake of the economic downturn and have been able to pay off some debts, it has been claimed.

Sandra Quinn, director of communications for Apacs, the UK payments association, commented: "Lots of people are in a better financial situation in some odd way."

She noted that mortgage rates have come down in recent months, leaving people with spare money with which to clear debts.

And Ms Quinn revealed that more people are using their debit cards rather than their credit cards, "because they are spending what they have rather than what they can borrow".

Her comments came following new figures from Apacs, which showed that the total value of debit and credit card purchases stood at £94.2 billion in the first quarter of 2009.

The report also found that the total amount of cash machine withdrawals hit £45.1 billion in this period.

By Jamie Price

Consumers are increasingly working to become debt free in the current economic climate, an expert has noted.

Neil Munroe, external affairs director at Equifax, explained that people are choosing to spend what they have rather than borrowing.

It comes after Apacs - the UK payments association - revealed that credit card lending in the first quarter of the year stood at £30.3 billion, while repayments reached £29.6 billion.

Mr Munroe explained that Britons are becoming more aware of the potential problems they may face in repaying debt, choosing to limit their exposure as a result.

"Maybe there is an expectation that their job may not be as secure as it was and therefore people don’t want to be caught out with no job and [high] borrowing still," he said.

Recent statistics from Credit Action indicated that the average household in the UK with an unsecured loan owes £21,580, excluding mortgages.

The cost of borrowing a mortgage has fallen to its lowest level since 2004, according to a new report.

Figures from the Council of Mortgage Lenders (CML) also revealed that there were 18,900 home mover loans approved in March, a rise of 27 per cent on February’s figures.

Despite this, the body noted that many borrowers still need to build up large deposits before being able to obtain a mortgage.

But they are benefiting from the current low level of interest rates, it explained, with typical home movers using 11.4 per cent of their income to make repayments.

"There is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can’t," commented CML head of research Bob Pannell.

However, he added that "the burden of debt payments is low" for people who can access mortgage finance.

Meanwhile, Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn has predicted that house prices will level out later in 2009.

By Jamie Price