Abacus Daily Debt News

The majority of parents in the UK are concerned that their children will fall into debt in later life.

This is the finding of a new survey conducted by Nationwide and the Personal Finance Education Group, which indicated that 69 per cent are anxious about this, a rise from the 62 per cent recorded in 2008.

However, 91 per cent of those asked stated that it is up to the parents to impart financial education as well as schools, although many admit they do not have the skills in place to teach their offspring.

Commenting on the fact that 77 per cent believe that money matters should be taught in schools, Nationwide’s head of corporate responsibility Caroline Hallatt said: "It is important that children of all ages have a good understanding of financial matters so they are equipped to make the best possible decisions … when they leave school."

Meanwhile, a recent Nielsen-British Retail Consortium survey showed that Britons are increasingly anxious about their personal debt levels, with 69 per cent planning to use spare cash to improve their finances.

By Sarah Adie

Children from middle-class families appear to be being put off from applying to university because of hikes in tuition fees, suggesting that debt fears may be a factor.

Figures from the Higher Education Funding Council for England have shown that interest in college places from such people is rising less quickly than other lower-income demographics, the Daily Mail reports.

And those who are not successful in achieving bursaries and grants in order to help them pay their way through university could be considering moving abroad or looking for work instead.

Statistics from the Student Loans Company also revealed that almost 140,000 school leavers did not receive grants in the autumn, with a minimum of 17,000 missing out after the income limit was dropped to £50,000.

However, those currently at university may like to consult a money doctor, of which there are many in more than 70 higher education facilities and who are trained by the Financial Services Authority to help young people manage their money.

By Sarah Adie

Sections of the Consumer Credit Act 1974 are to be clarified by the Office of Fair Trading (OFT) in order to help those in debt understand how they apply to them.

According to the organisation, some people are under the impression that parts of the Act can be utilised to eradicate debt, while a number of creditors are not offering information to their clients, which they are legally obliged to do.

Director of consumer credit with the OFT Ray Watson noted that "a great deal of confusion" has arisen.

"This guidance is to clarify the legal position and the OFT view on standards expected of the industry," he continued, adding that it also intends to make people aware of the risks of trying to use the Act to avoid "legitimately owed" arrears.

Meanwhile, UK adults were recently advised by Andrew Hagger of Moneynet.co.uk to avoid accidentally going into their overdrafts without authorisation in January and, if it looks likely, to contact their creditor to accommodate this.

By Sarah Adie

Women appear to be cutting back on their expenditure as a result of the recession and limiting potential debt problems that may arise through too much shopping.

This is according to the latest survey from The Co-operative Bank Savings, which found that 75 per cent do not intend to make impulse purchases this year.

Cutbacks will be seen in clothes and accessories, while eating in restaurants will also be minimised.

Director of retail products for the firm John Hughes noted that this study is indicative of the fact that women are being "savvier" about their spending habits.

"They are sticking to a budget and paying greater attention to their bank balances," he said, adding that saving money throughout the year can be beneficial in the long run, despite it being difficult right after the Christmas period.

And similar numbers were recently published by the Office for National Statistics, which found that less is being spent on clothing and footwear, with the average amount being £21.60 a week.

By Sarah Adie

The proliferation of store cards has been derided by an industry expert, who stated that their existence exacerbates the levels of personal debt and can result in poor financial circumstances.

Andy Wood of insolvency trade organisation R3 and the P&A Partnership said that offering credit in shops is "frankly irresponsible".

"Without proper training, shop assistants are inappropriately qualified to understand the consequences of what they are selling and [are] often commission driven," he continued.

In addition, R3 cited figures from a recent study of industry practitioners, which revealed that 70 per cent believe it to be too easy to gain access to store cards, while some reported instances where people have held more than 30 at any one time.

This comes after Chris Tapp of Credit Action recently observed that Britons are having a "love affair" with credit cards, with people turning to plastic as a solution to the recession.

By Sarah Adie

Action needs to be taken to ensure low-income households are provided for in the recession.

That is the suggestion of head of policy and campaigns at Family Action Rhian Benyon, who called for the government to ensure such families are protected - particularly as the rise in fuel bills caused by the recent cold snap will be adding to pressure.

Increased benefits and tax credits are required to help avoid debt problems, she said, warning: "Low incomes mean that many will not be able to access mainstream credit and lending facilities, forcing many to seek loans from higher-cost home credit companies."

Earlier this week, governor of the Bank of England Mervyn King noted that the next couple of years are likely to see the patience of British households "sorely tried".

Inflation will pick up "markedly" over the first six months of 2010, he predicted, while salary freezes are to be expected.

By Andy Mackay

The lack of structure in repaying credit card debt is creating problems for consumers, it has been argued.

Samantha Owens of Moneyfacts.co.uk noted that although this form of finance is an important part of the banking industry, many consumers do not understand their commitments.

She said that changes to the system may be necessary, in order to allow customers to properly manage their money worries.

"Credit cards … come with the risk of a greater temptation to overspend; [they] are one of the most expensive forms of credit and [have] little or no structured repayment mechanism," Ms Owens explained.

The price comparison site called for the introduction of recommended minimum payments to be considered, as many people are not reducing their credit card debt by significant amounts.

A similar suggestion was recently made by moneysupermarket.com, which proposed recommended levels rather than mandatory ones because the latter would create further difficulties.

By Andy Mackay

Consumers in Wales could be at the greatest risk of debt problems caused by credit card fraud, as research has shown Cardiff is the UK’s ‘hotspot’ for the offence.

Insurance company CPP revealed that more than a third of card holders in the city have been a victim at some point, with the Welsh capital overtaking London for the first time.

Overall, card fraud was found to have risen by six per cent over the course of the last two years.

And CPP’s Sarah Blaney noted that more people are being affected as "increasingly sophisticated methods" are adopted by fraudsters.

"We urge all card holders to be vigilant and take steps to protect themselves to avoid falling victim to card criminals," she said.

Debt problems may have been caused by a recent internet scam, with the Daily Mail noting last week that an online network selling bank and credit card account details generated £100 million.

By Andy Mackay

Those facing debt problems may be adding to their money worries by paying above the odds for mobile phone usage.

According to moneysupermarket.com, the average Briton is wasting £250 worth of text messages and calls year, with 27 hours of free minutes going unused.

The price comparison site suggested that consumers could save money by switching to a cheaper tariff that caters for their needs, rather than paying too much for unnecessarily high allowances.

With the mobile industry thought to be earning £13 billion annually off the practice, manager of mobiles and broadband at moneysupermarket.com Mike Wilson stated: "It’s great that consumers are under their monthly allowance to avoid any extra costs, but it’s also important to get the most out of your contract for what you pay each month."

The site recently offered advice on credit cards to those struggling with debt, recommending that those considering switching to a cheaper provider check their credit rating first.

More people may soon be faced with increasing debt problems, as a new report to be released this week is expected to reveal that the unemployment rate in the UK is climbing.

Labour market figures to be published on Wednesday (January 20th) should show that joblessness has reached eight per cent, with the number of Britons out of work in November 2009 being 2.5 million, the Daily Mail reports.

This is an increase of 500,000 in 12 months and Commerzbank economist Peter Dixon noted that it is possible this trend could continue in 2010.

And the executive chairman of consultancy Begbies Traynor Ric Traynor corroborated this view.

"There is every reason to suggest that the insolvency peaks of this recession remain some way off," he said, noting that interest and tax rates are sure to increase.

Meanwhile, a recent study by RSM Tenon predicted that bankruptcy levels could reach 18,000 in the north-west in 2010, with such instances rising by eight per cent in Manchester and 13 per cent in Liverpool, The Business Desk reported.

By Sarah Adie