Understanding interest rates and charges.
An ePetition was recently launched by Martin Lewis’ Money Saving Experts Website to bring financial education into schools. The petition caused a lot of debate amongst lots of people, as some believe that debt occurs because of lack of knowledge, while others believe it is due to unforeseen events such as illness, redundancy or an addition to the family.
Whatever your reason for debt, it is always important for you to have an understanding about the charges that are applied to your credit cards and loans.
If you have taken out a loan you will know that you signed an agreement prior to it outlining the amount you are borrowing, the interest percentage that will be charged and the total amount that you will pay back as well as detailing your repayment amount and period. This agreement is known as a Consumer Credit Agreement and is required under the Consumer Credit Act. Once you have signed this agreement, you are acknowledging and accepting the terms including interest and charges that may be applied if you fail to comply with the agreement.
If you have taken out a credit card you will once again know that you must sign and agree to a Consumer Credit Agreement, the same as with a loan. With a credit card, the card provider can increase or reduce the interest rate over the time that you have your account. The new interest rate will apply to all of the money you owe on your card, except for any amounts you may have at special promotional rates.
If your card provider decides to increase your interest rate, it must give you at least 30 days’ notice. When card providers tell you about an increase in your interest rate, they will explain in clear language how it is changing, what it will cost and the options available to you.
You can decide not to accept the new interest rate. If you do this within 60 days, your card provider will close the account and you will need to pay back the money you owe at the current interest rate. If your card provider also offers other lending products, such as personal loans, it may let you transfer the balance on your credit card or store card to one of these, at your current interest rate (or a lower rate).
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Loan Sharks – who and what are they?
Over recent years, borrowing from ‘traditional’ lenders, banks and credit card companies, has been harder and hard to do. As a result we have seen a rise in the number of people turning to payday loans and illegal loan sharks.
A loan shark is someone who will give a person a loan, charging them a high level of interest and short repayment terms. Loan sharks are unlicensed and operate illegally, as well as being unregulated from any governing financial body.
Loan sharks commonly prey on the most vulnerable people who have nowhere else to turn. When people struggle to pay them back, loan sharks often turn to threatening tactics to get payments from the debtor.
With many finding it more and more difficult to borrow in these tough economic times, increasingly people are turning to loan sharks. Figures released in 2009 by research agency, Debt on our Doorsteps, showed an estimated seven million people have borrowed from loan sharks.
If you have borrowed from an illegal loan shark and do not know what to do next… firstly you need to report them to the police or the Illegal Money Lending Team, details can be found on Direct Gov website by clicking here. Once you have done this you many want to look at your finances and seek free and impartial advice from Payplan to help you arrange your finances.
Have you had experience with a loan shark? Would you like to share your story and help others? This is the place to do it.
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Preparing for your credit card statement.
A recent study by Visa found that one in five of us plan to fund this Christmas on credit cards, meaning many will be expecting the bill to drop of their door step any day now.
If you are one of those people, then we are urging you not to panic and follow these simples steps to make sure it doesn’t get the better of you.
- If you have kept track of your spending you should already have a rough idea of how much you will owe, if not try to gather all of your receipts together so that you can eliminate the element of shock.
- Work out your income and expenditure to calculate how much surplus you have left once everything has been paid out.
- If you have a 0% interest on purchases credit card then you can calculate your surplus to pay this back in instalments until the offer expires.
If you are being charged interest, try to work out your payments in order to repay it as quick as possible, but still affordable to you. Or you could look for a new card that offers you a deal on balance transfers.- If you are struggling with other debts you can contact Payplan for free and impartial advice on how to deal with your debts and finances.
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New year, new you. Changing your spending habits
The New Year is always a good time to try something new or change things in your life that you are not happy about.
With the state of the economy getting worse and families seeing the biggest squeeze to their budgets for 60 years, many may be seeing the New Year as an opportunity to change the way they are spending their money.
If you are looking to change your spending habits, here are a few top tips.
- Write down all of your expenditure and see where you are spending your money. From this you can look at areas that are excessive or where you know you spend too much.
- For all of your utilities you can use comparison websites to see how much you can save. If it turns out that you have the best deals then you haven’t lost anything. However you could save yourself lots of money if you find a cheaper deal.
- On your grocery shop, why not switch to the supermarket own brands. Alternatively why not switch supermarkets? Try going to your local supermarket to buy cheaper fresh fruit and vegetables or visit one of the low budget supermarkets.
- Make use of loyalty card points and use them wisely. Tesco Clubcard and Sainsbury’s Nectar Card have double value vouchers if they are spent on certain items, so it is always worthwhile checking.
- Instead of cutting out luxuries, sign up to discount websites such as Groupon to get the things you love, for less.
How will you change the way you spend?
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