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Inflexible Friends And Plastic Assets, Why Money Isn’t Buying Love Anymore
By: Rachel Lane
Consumers reject financial advice in favour of financial frivolity
It would appear that even though their “friends” aren’t as flexible as they used
to be, consumers are still stretching their credit cards beyond the comfort
zone.
The vicious circle of debt manipulation involving banks, consumers and
commercial credit companies is putting consumer spending under strain, as funds
begin to dry up. In May 2005, the Financial Times reported the accusation that
banks were fuelling Britain’s personal debt problem by repeatedly offering
debt-ridden customers loans they were unable to repay.
As the UK’s personal debt increases by £1 million every four minutes, credit
card spending habits still seem to be spiralling out of control. According to
Credit Action, nearly 66% of the adult population have a credit card, with
multiple card holding becoming a growing phenomenon in the UK. More than 60% of
card holders possess at least two cards, with 10% holding at least five cards.
There has also been a significant rise in the number of personal bankruptcies.
In the year up to March 2005, 37,886 people were made bankrupt, a 30% increase
on the previous year.
Credit Action reported that some credit card companies reduced their minimum
repayments from 3% to 2% last month, which has been seen by some as
irresponsible. To put this into perspective, a £3000 credit card balance at
17.9% APR would now take more than 40 years to repay if the minimum repayment of
2% is paid each month, in comparison to 19 years with the 3% minimum repayment.
Barclays even warned of falling profits for the Barclaycard credit card division
last month, as more customers missed repayments and bad debtors increased.
For those consumers with regular incomes and strong credit records, credit cards
with APRs as low as 6.9% are available, that’s less than half the standard APR
most consumers have to pay on the cards in their wallet. By just using a variety
of online personal finance tools, consumers can save themselves considerable
grief by undertaking some financial homework.
In the UK, a variety of websites are available to compare credit cards, loans,
life insurance, car insurance, mortgages, savings accounts, Child Trust Funds
and current accounts. With just a few clicks of the mouse, a trusty search
engine and a clear definition of the relevant search terms, such as “credit card
guide” or “loans guide”, the consumer can have swift access to a number of
useful research sites including moneynet.co.uk, moneyfacts, moneyextra and
moneysavingexpert. These companies are specially set up to provide impartial
consumer information and by using them for personal finance research, the
consumer could effectively save thousands of pounds by choosing the most
appropriate credit card, loan and mortgage accounts, not to mention securing
good deals on car insurance, life insurance, travel insurance and household
insurance.
For further information on the companies included in this article:
http://www.moneynet.co.uk/
http://www.creditaction.org.uk/
http://www.parentspenniespounds.co.uk/
http://www.moneysavingexpert.com/
About the Author:
Rachel writes for the personal finance blog Cashzilla. http://www.cashzilla.co.uk/
Cashzilla is a psychological, technological manifestation of the financial
pressure Rachel faced when she graduated from her very expensive, much extended
degree.
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