Abacus Daily Debt News

Credit card companies putting up their annual percentage rates (APR) despite the Bank of England cutting its base rate to record lows is unfair to the consumer, suggests one financial organisation.

Saga Finance chief executive Roger Ramsden commented on recent research conducted by Moneyfacts.co.uk that found companies are continuing to put their charges up.

"The current difficult economic climate means that customers are in greater need for competitive deals to help maximise their financial resources," he said.

In the last six months a dozen firms had hiked rates, which was "disappointing", he added.

Debt advice seekers should look to challenge any increase in rates on their cards, consumer body Which? revealed this month.

Martyn Saville, a senior researcher at the organisation, urged those with credit card debt to consider cancelling their account if there was a rise in charges, which would allow them to pay the money back at the previous rate.

By Francis Finch

Banks and building societies are providing higher rates of interest on their online-based accounts, according to one comparison website.

Head of Moneyfacts.co.uk Louis Kaszczak suggested this could be because one-third of potential savers want "easy access accounts".

He said: "Online-based accounts are cheaper and easier to run for providers and this saving can be passed on through higher rates. The average rate is nearly twice as high."

Accounts set up online had average rates of 0.95 per cent, compared to 0.5 per cent provided in branches, Mr Kaszczak added.

His comments follow a statement by three lenders that their available rates for online accounts are expected to go up. This may be due to smaller providers finding it difficult to attract customers in an increasingly competitive fixed-rate bond market.

Barnsley Building Society, Principality Building Society and Intelligent Finance all announced a rise.

Moneyfacts.co.uk recently revealed that instant access accounts are consumers’ most popular method of saving, with fixed-rate bonds coming second.

By Francis Finch

A rise in bankruptcies is likely to occur as rent becomes due on the next quarter day, suggests one expert.

Martin Kingman, debt recovery and insolvency manager at law firm Furley Page, encouraged landlords and their tenants to reach an agreement where unpaid debt could be deferred.

He said: "Landlords are facing tough choices about recovering overdue rent while tenants are struggling to make ends meet. The last thing either party wants is vacant premises."

Organisations of all types were at risk during the current economic downturn, with deferred payment plans or payment holidays being possible options for preventing insolvency for landlords and tenants, Mr Kingman continued.

In efforts to increase debt management for those in financial difficulty, the British Retail Consortium is promoting the introduction of monthly billing to replace the current quarterly method.

The government last month announced changes to the law which will protect tenants from being made homeless due to the repossession of a house because of debt accrued by their landlord.

By Francis Finch

Those with credit card debt should be more diligent when applying for a new card, suggested one expert.

People that have a number of rejections in their credit card history are more likely to be turned down again, implied Peter Harrison, credit card expert at moneysupermarket.com.

He said: "It is imperative that people take care when applying for credit cards. Those that are too reckless in their applications may find their credit records fouled with a litany of failed attempts to secure credit."

Carelessness when applying could result in consumers being limited in the number of products made available to them, he added.

However, some banks are beginning to help customers by releasing the criteria on which eligibility is judged, which Mr Harrison stated was "encouraging".

Royal Bank of Scotland, Barclaycard and MBNA all provide guidelines for those seeking credit, with Barclaycard having stipulations such as a good credit rating, no history of county court judgments or individual voluntary arrangements and a regular income.

This follows recent news where Adrian Coles, director-general of the Building Societies Association, hinted that consumers are becoming more wary about credit and debt problems.

By Francis Finch

Despite improvements in property prices, the housing market will continue to be held back by a lack of finance, it has been claimed.

Lucian Cook, director of residential research at Savills, noted that many people will be looking to buy a home, as it may work out cheaper than renting.

But the market will be "constrained" by a restriction on the amount of mortgages approved, she said.

Ms Cook explained that only the people who have a lot of equity in their homes or have a large amount of cash will be able to obtain loans.

"The limitation is the number of people who are able to access the mortgage market and take advantage of that," she commented.

It comes after data from Hometrack showed that the average UK property price has declined by approximately ten per cent over the past year.

This took average values down to £155,600, the report found.

By Jamie Price

Mortgage approvals are set to rise over the coming months, it has been suggested, something that may be welcomed by home buyers seeking finance.

Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors, said that the monthly amount of home loans taken out by borrowers could reach 65,000 by the end of the year.

He was commenting after data from the Bank of England showed that around 43,000 mortgages were approved in April, the third month in a row that the figure recorded a rise.

Mr Rubinsohn noted that this was an improvement on the low point of 27,500 that was seen in November.

But he warned that the economic downturn could continue to impact on the sector, remarking: "Recent numbers have been far lower than would typically be expected even in the midst of a recession."

He added that "it is still unclear how rising unemployment levels will affect any recovery".

By Jamie Price

Repaying debt is a bigger priority than saving for UK households at the moment, one expert has suggested.

Brian Morris, the Building Societies Association’s (BSA’s) head of savings policy, said the situation is such that there is the potential for a net withdrawal from the UK’s saving market during this year.

"In the current low interest rate environment there is evidence that households are looking to repay debt rather than save," he remarked.

Mr Morris made his comments as the BSA released its building society mortgage figures for April.

The £1.551 billion sum for the month was down by £20 million on March and £2.37 billion on the previous year. The BSA claimed the new statistic demonstrate that lending levels are beginning to stabilise.

Also published today were the Bank of England’s mortgage approvals statistics, which showed a 57 per cent increase in May compared to November’s low, according to the Royal Institution of Chartered Surveyors’ Simon Rubinsohn.

By Chris Trimble

New second-hand car buying figures demonstrate that people have less money to spend now than they did at the end of 2008 and start of 2009, according to Sainsbury’s Finance.

The company, which carried out the research, found that the number of consumers looking to purchase second-hand vehicles in the six months up to August is down 12 per cent on the September to February period.

In addition, the amount people are willing to spend has fallen, with a 21 per cent decline compared to the previous half’s figures.

Head of Sainsbury’s Loans Steven Baillie advised consumers to negotiate when buying second hand in order to get the best deal.

"It’s important buyers remember to haggle when negotiating any car purchase, as haggling can save the buyer hundreds or evens thousands of pounds," he remarked.

In April, uSwitch claimed that 35.4 million British people now barter for better deals as they seek to cut spending and become debt free.

By Chris Trimble