Abacus Daily Debt News

People who are coming to the end of fixed-rate tariffs from their energy providers should look to switch as soon as possible, research has suggested.

Comparison website moneysupermarket.com said that once a fixed-rate term comes to an end, many individuals will be transferred to a more expensive deal that could cost up to £340 a year extra.

Scott Byrom, utilities manager at the organisation, remarked: "Timing is crucial when proactively looking for a new energy product, move off your fixed rate too early and you could face termination fees of up to £75."

Similarly, those who leave it too late are likely to find themselves on a less attractive tariff, he added.

According to the statistics, those who have a One Tariff fixed deal with npower could see their bills jump by an annual amount of £231, while Scottish Power customers may be hit with a £340 a year increase.

Last month, Dax Harkins of National Savings & Investments advised people not to waste money they may save from bills in the summer.

By Francis Finch

Many people would find themselves quickly getting into debt management problems if they were to lose their main source of income, one expert has suggested.

Protection market director at Scottish Widows Richard Jones said that a number of individuals are not preparing themselves for the worst should it happen.

He remarked: “The fact that people rank financial protection, such as critical illness cover, alongside eating out and gym membership, shows that they aren’t truly assessing the risks they could face if the unexpected happens.”

While most individuals consider paying their household bills as their most important financial priority, many neglect to keep themselves covered for situations in which debts could build up, Mr Jones added.

According to a recent study by the organisation, 45 per cent of those surveyed replied that they would use savings to survive if they lost their main source of income, with 63 per cent of people having put aside between £500 and £1,500.

Chris Tapp of charity Credit Action recently commented that new statistics highlighting the UK’s debt problem should be a wake-up call for those who have borrowed too much.

By Francis Finch

People could be avoiding using additional income to make mortgage payments on their house, it has been revealed.

The Council of Mortgage Lenders (CML) stated that while the financial status of variable rate borrowers has gone up by roughly £20 billion a year due to interest rate cuts, only about £5 billion of this is being used to pay more on home debts.

This suggests people on tracker mortgages may be putting off using money saved on low interest rates for other purposes rather than trying to reduce the amount they owe on their homes.

However, it could also mean that debt repayment is being offset by other areas of the population, such as the self-employed, who may be experiencing financial difficulty despite the lower rates.

Earlier this year, HSBC subsidiary First Direct said that debt management was important for homeowners trying to handle their cash flow during the recession.

By Francis Finch

People in the buy-to-let housing market are showing less of a propensity for finding better mortgage deals, one expert has suggested.

Neil Young, chief executive officer of portfolio management organisation Young Group, said that the Bank of England base rate is causing consumers to neglect their mortgages at a time when it is vital they keep themselves updated on developments.

He remarked: "Rates for new mortgage products can change rapidly and to make the best of their own specific circumstances borrowers need to keep on top of the market."

The best mortgage offerings are generally snapped up by early birds within days of being revealed, Mr Young added.

According to recent research compiled by the firm, 24 per cent of residential property investors check their mortgage choices at least once every six months compared to four-fifths in 2008.

In related news, Michelle Slade of comparison site Moneyfacts suggested that individuals are becoming increasingly concerned with the possibility of a rise in interest rates.

By Francis Finch

Mothers and fathers who try to provide for their children’s future may be leaving themselves in financial difficulty and in need of debt managment advice, new research has suggested.

According to a survey by The Children’s Mutual, savings made by parents are often used to fund their children’s university plans or first homes.

Chief executive of the organisation David White said: “We are highlighting to parents of younger children that by starting to save for their child’s future now, they can help avoid the struggles faced by the baby-boomer generation.”

Faced with choosing between planning for retirement and the future of their children, parents frequently sacrifice their own aspirations to help their sons and daughters, the statistics show.

The figures revealed that 28 per cent of 25-year-olds are provided with some type of funding towards education.

In recent news, Laith Khalaf at Hargreaves Lansdown stated that people who do not properly prepare for their retirement could face a “miserable time” on a state pension.

By Francis Finch

New plans set out in the government’s "Better Deal for Consumers" white paper have been commended on a number of fronts by one expert.

Features of the initiative include increased regulation on store credit cards and prohibiting unsolicited credit card cheques.

Head of loans and debt at comparison site moneysupermarket.com Tim Moss identified a few flaws but said that overall the proposals were welcome.

He said: "Plans to make the whole lending process more transparent are to be welcomed, even if it is a case of shutting the stable door after the horse has bolted."

A number of people that are currently experiencing financial difficulty had mostly taken out loans some time ago, however future borrowers could benefit, Mr Moss added.

Plans to address the issue of loan sharks may not work, he remarked, but on the whole it is important that the government is addressing problems for those who can not obtain credit through the traditional channels.

By Francis Finch

People should not put off leaving money aside for their retirement as they risk financial struggles when they are older, one expert has suggested.

Senior partner at consultancy firm Fostor Denovo Ian Bird said that leaving it too late may mean employees need to continue working for longer than they wish.

He remarked: "There are an awful lot of people who aren’t fit enough to work later in life so you could find that you can’t work and can’t retire."

Those who rent properties may also discover they are unable to support themselves through equity release, Mr Bird added.

State pensions are unlikely to support the growing number of people reaching retirement age, he commented, with some people required to continue working into their early 70s in the future.

Earlier this month, the firm released a report showing that over one-quarter (28 per cent) of individuals in the 25 to 44 age bracket have not put any financial planning in place for when they retire.

By Francis Finch