Abacus Daily Debt News

Homes that are uninsured could be a debt risk as research has found that some people are unaware of the true cost of their possessions and how much it would be to replace them should a worst case scenario occur.

According to Hiscox, 60 per cent of high net worth homeowners underestimate the value of their assets which could result in them underinsuring their property.

The consequences of not having appropriate cover could result in a loss as the payout would then be less than the total value of items lost, which in turn could result in families going into debt to replace their items.

Andrew Chesney, risk and valuation adviser at Hiscox, said: "People spend their money in very different ways. It is therefore important to consider all items in the home and not just those that are front of mind."

This follows research by insolvency trade body R3, which revealed that couples who tie the knot are in debt for around three years as a result of the cost of their big day.

By Joe White

A decision by Lloyds Banking Group to accept a recent High Court ruling that banks must refund payment protection insurance (PPI) mis-sold on loans has been welcomed as a recognition that there is no choice for lenders but to comply.

The lender revealed in its first quarter trading statement that it has responded to the latest judgement by entering into talks on the issue with the Financial Services Authority, as a result of which it has now set aside £3.2 billion to settle claims.

Banks have been fighting against having to make refunds of PPI mis-sold to unsecured loan customers.

Commenting on the news, financial services expert at Consumer Focus Oliver Morgans remarked: "It is good news that Lloyds has recognised the PPI court ruling has left banks with nowhere to hide. This was mis-selling on an epic scale."

He added that other banks should similarly accept the court decisions and pay up.

By Joe White
 

Britons who may be struggling to get debt free are having their finances squeezed by a difficult balance between supply and demand for food around the world, a United Nations expert has said.

Speaking on the British Medical Journal podcast, special representative of the secretary-general for food security and nutrition David Nabarro said prices have been quite low in recent decades, but saw one spike in 2008 and another last year.

He noted: "One of the reasons for this is that firstly, in today's world there is quite a tight balance between food supply and demand."

This means that while there is enough to go round, concerns over some harvest have led to imports being stopped - such as by some rice producing countries.

Food prices have contributed to higher UK inflation, with the Consumer Prices Index rate standing at four per cent.

The rise in the cost of living for the year to April 2011 will be revealed by the Office for National Statistics on May 17th.

By James Francis
 

Those who get married take three years to pay off the cost of their nuptials on average, it has been revealed.

Research by R3, the insolvency trade body has found the typical couple takes 33 months to pay off the cost of their celebration.

Many pile up credit card debt or take out loans, although 36 per cent borrow money from their friends and family, a figure rising to 45 per cent for the 18-24 age range.

And this group was also the most likely to spend heavily on their weddings, with 20 per cent having a budget of over £10,000 for the occasion, compared with seven per cent of those aged between 45 and 54.

Financial planning firm Baigrie Davies recently said couples planning their finances after getting married should make paying off debts run up through loans and credit cards to pay for the big day one of their top priorities.

By Joe White
 

New rules on changes to energy prices have come into force today (April 28th), which may help those who are struggling to get debt free.

Companies will have to give customers 30 days notice of any forthcoming cost hikes, regulator Ofgem has decreed, meaning those battling against debt can respond to the situation.

Consumer Focus energy expert Hannah Mummery said the rule will "give people the opportunity to budget for higher bills in advance," which may help those in debt to ensure they can keep up monthly repayments.

And price comparison website uSwitch also praised the new regulation, with director of consumer policy Ann Robinson suggesting it will make the industry more "transparent" over price and help those who would like to switch to a cheaper provider.

It ends a practice by which consumers can only learn they are being charged higher tariffs for their domestic fuel when the bill arrives.

By Amy White
 

A new survey of the cost of going to weddings has indicated that many guests could pile up credit card debt to pay for attending them.

The study by Halifax has found the cost of going to such celebrations and associated costs - including stag and hen parties - amounts to £452 per person.

Such expense may mean little for the well-heeled who will make up most of the guests at the royal wedding this week, but for others it may impact on their debt situation.

Costs include accommodation, present buying and expenditure on clothes and with the average person attending two weddings a year, may lead to over £900 a year being spent, which might end up on credit card balances.

And the cost of getting married is a large one, despite being less expensive on average than a year ago.

Research by Yorkshire and Clydesdale Banks has revealed couples have trimmed an average of £4,331 off their nuptial expenses in the past 12 months, but this still leaves a typical bill of £16,569.

By James Francis

The majority of economists in a new poll have predicted it will be August before the Bank of England base rate is raised.

A survey of 22 experts found 14 regarded this as the most likely date, which could boost those struggling with mortgage repayments and fearing repossession.

Only four favoured a rise as soon as next month and other predictions included June, July, November and even February 2012.

There was also disagreement over the level of the base rate 12 months from now, although the most popular forecast with 12 was one per cent.

A 1.25 per cent rate gained six predictions and one said 1.3 per cent.

Such forecasts come at a time when details are still awaited of how much the economy grew by in the first quarter of 2011.

All nine members of the Bank of England's Monetary Policy Committee have voted the same way in each of the past three meetings, with three of them currently supporting a higher base rate.

By Joe White
 

Millions of people could be seeing their credit card debt rise because of having non-paying guests in their home.

Research by Churchill Insurance has revealed 4.9 million people are playing host to friends or relatives, often for long periods of time.

The most common instances concern parents with their adult children, who may return from university to live in the family home because they cannot afford to rent elsewhere, while others come back while they save for mortgage deposits.

However, this can be expensive for the hosts, not just because of the absence of rental income, but because such guests often fail to respect the house.

The second factor leads to £66 million worth of damage being caused each year, the survey showed.

Children living with parents while saving for a mortgage may find it harder to get on the ladder because lenders demonstrate "discrimination" against new-build homes, according to Vernon Pethard, managing director at newhomesforsale.co.uk.

They do this by offering more favourable rates for mortgages on existing houses, he alleged.

By Amy White
 

A new survey has indicated the level of credit card debt fell in February compared with the same month in 2010.

Data from the Finance and Leasing Association (FLA) revealed a six per cent fall in lending among its members, with credit card usage down five per cent.

Other forms of borrowing dropped by more, with a 15 per cent decline in unsecured loans and storecard spending down by 24 per cent.

The only form of borrowing to see a year-on-year increase was car finance, up eight per cent.

FLA head of consumer finance Fiona Hoyle remarked: "It's been a long winter of high inflation and low wage growth meaning that consumers have less to spend."

The negative impact of inflation on consumer spending and borrowing may diminish in the months ahead, if the March Consumer Price Index (CPI) figures are a guide.

Last month, the CPI rate dropped from 4.4 per cent to four per cent.

By James Francis
 

Many people do not realise how they can lower their debt repayments by switching bank account, it has been noted.

Consumer website Which? published a list of five myths people fall for when considering the issue of changing their bank.

One of these is the notion that being in an overdraft means they cannot swap over.

In fact, many banks do offer to match an existing overdraft, the site revealed.

Other myths included the idea that all banks offer poor customer service and the notion that it will be hard to swap over direct debits and standing orders, when in fact banks are obliged to move these over.

While this may help those with overdrafts, other ways of lowering debt may be sought for different kinds of credit, such as credit cards, where a consolidation loan may be the answer.

Switching banks may be a problem for some as a recent Daily Mail report claimed there are over 2,000 communities in the UK with one bank branch or none at all.

By Joe White