Personal Finance Blog

10 percent rise in authorised interest costs

According to Moneynet.co.uk, the average authorised overdraft interest rate has risen from 13.85 percent in February 2008 to 15.32 percent in February of this year.

It has been reported that somebody who became overdrawn by £1,000 in February 2008, for six months of the year, would have been faced with interest charges of £69.25.  In contrast, a person in the same situation today would be looking at interest charges to the value of £76.63 – an increase in excess of 10 percent.

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Homeowners who have built up multiple credit including overdrafts, credit cards and store cards, could consider consolidating it with a secured loan.  One of many finance options available, a secured loan for consolidation could leave borrowers with a single monthly repayment as opposed to juggling several.  By tying up existing credit, such as credit cards, into one place, borrowers could even be left with more money each month as a result of lower monthly outgoings.  However, if opting for a secured loan to consolidate existing credit, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.

A child comes with a £200,000 (plus) price tag

According to LV=, the results of their seventh annual survey have shown that the cost of raising a child to the age of 21 is likely to cost parents in excess of £201,000 – equivalent to £26 per day.  These costs were found to have increased by 4 percent since the previous survey in January 2009, with childcare and education amounting to the greatest expenses.

In fact, the survey revealed that a typical household where both parents are working could be faced with childcare costs up to £54,696 for each six month to 16 year old.  This figure includes nursery fees, after school clubs and holiday clubs.  Furthermore, the cost of education reportedly amounts to £52,881 throughout a child’s lifetime.

Findings have shown that 77 percent of parents have admitted to cutting back on family expenditure due to the ‘ongoing economic situation’, with this figure coming in lower than the 81 percent recorded last year.  It would seem that 36 percent of parents are also cutting back on the amount of money that they regularly save.  In addition, it was found that 19 percent of respondents have been forced to cancel or review their insurance products and income protection cover in order to assist with budgeting for the family.

With regard to pocket money, LV= discovered that the sum that a child receives has increased by virtually 5 percent this year.  The value now stands at £4,338, which reportedly marks a reduction from £5,469 in 2007.  It has been highlighted that 13 percent of parents have actually been asked for less pocket money, which is thought to be a sign that ‘the need to maximise the family’s finances is being felt by more than just mum and dad’.

The survey has revealed that the cost of raising a child is highest during the ‘university years’ when parents could potentially be faced with annual costs of £13,677.  However, findings also show that parents with toddlers between the one and four years of age could be looking at a cost of £13,014 per annum.

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Homeowners who have found themselves using credit and store cards to cover the cost of their families, could consider consolidating this with a secured loan.  One of many finance options available, a secured loan for consolidation could be used to tie up any existing debts such as credit cards and personal loans.  What’s more, in taking this approach, borrowers could be left with lower monthly outgoings and more money each month, which could potentially be set aside in a savings account.  However, if opting for a secured loan to consolidate debt, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.

Run up to Christmas saw instalment credit spending increase by 17 percent

According to the Finance & Leasing Association, consumers spent 17 percent more on instalment credit during the lead up to Christmas compared to the same period a year before.  It is believed that a proportion of this increase was related to the rate of VAT returning to 17.5 percent, which reportedly prompted people to make money-saving purchases beforehand.

Compared to 2008, it has been revealed that the sum of new consumer lending provided by members of the FLA fell by 15 percent in 2009.  However, an analysis of the actual products has shown that credit card, store card and store instalment credit spending have ‘held up, relative to longer-term credit products’.  It was found that consumers are making smaller purchases on instalment credit, such as white goods and home electronics, which typically cost up to £700.

Fiona Hoyle, the FLA’s Head of Consumer Finance, said: “Our figures tell a wider story of the recession.  Overall, new consumer lending is down by 15%.  But the breakdown between different credit products tells us that customers are looking at the financial products available to them, and using credit products to meet specific needs.

“The High Street has benefited from FLA members providing credit to customers, whether through credit cards, store cards or store instalment credit.  Customers are using these products because they are flexible and allow consumers to spread payments for essential goods and keep them at levels that are within their budgets.

“The same principle applies to store cards.  But store cards are endangered by current proposals from the Conservatives, which would gold-plate new EU regulations and remove this convenient option for customers.  We hope the Conservatives will think again.”

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Homeowners who find themselves with multiple credit card or store card repayments each month could consider taking out a secured loan to tie these commitments up into one manageable monthly repayment.  One of many finance options available, a secured loan for consolidation could leave borrowers with just one monthly repayment as opposed to juggling several.  Furthermore, this single monthly repayment could even be lower than the sum of current outgoings.  However, if opting for a secured loan to consolidate existing credit, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.

Are you in control?

A study conducted on behalf of F&C Investments, which involved questioning 3,000 Britons between 35 and 45 years of age, has revealed that over half ‘do not feel fully in control of their finances’.  A further 36 were found to feel ‘a degree of control’ whilst 14 percent admitted that they ‘did not feel at all in control’. 

With regard to the gender divide, the study uncovered that 61 percent of men felt in control of their finances, whereas this was the case for 43 percent of women.  Furthermore, of the respondents with debts, a third were reportedly either ‘a little worried’ about their level of borrowing or were ‘finding it hard to keep up with repayments’

Findings also showed that virtually a third of those questioned have ‘enough rainy day cash on deposit to fund several months’ outgoings’.  This was found to be the case for 40 percent of men and 27 percent of women; however 34 percent of women and a quarter of men do not possess any savings at all.  In relation to investments, the study revealed that three quarters of women, and 58 percent of men, do not have any aside from cash on deposit and any pension arrangements.

When respondents were asked about their intentions for the coming year, 41 percent reportedly explained that they were not intending to increase their savings or investments.  Nevertheless, the study showed that 35 percent of men and 26 percent of women would open a savings account or increase the amount that they save.  Additionally, it was found that 17 percent of men and 3 percent of women would ‘put more in unit trusts / OEICs, investment trusts or shares’.

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Homeowners who are looking to re-organise their finances, particularly any existing credit, could consider taking out a secured loan.  One of many finance options available, a secured loan for consolidation could allow borrowers to replace multiple monthly repayments with just one.  What’s more, this single monthly repayment could even be lower than the sum of current outgoings – thus lowering monthly outgoings.  However, if opting for a secured loan to consolidate credit, it should be remembered that consolidating your debt may increase the amount you pay back overall and extend the repayment periods of your debts.