The latest interest rates remain unmoved; staying at 0.5% for the 18th consecutive month.

It was in March 2009 that the rates first dropped to their lowest point ever, but news of the latest interest rates have coincided with calls that they must now be increased in order to curb inflation.

The Monetary Policy Committee’s decision this month to leave rates where they were surprised no-one in the City.

But the clouds on the horizon include the CPI inflation figure for July which was 3.1%; way above the 2% target set by the Bank of England.

Furthermore, for the third month in a row, the minutes of the last Monetary Policy Committee meeting revealed that one member, Andrew Sentance, had voted again for a rate rise.

And there was good news for fans of the Bank of England’s quantitative easing scheme which has so far seen some £200 billion committed to its ideals. The Bank confirmed that they were continuing with QE and that it may well be further expanded.

Graeme Leach, chief economist at the Institute of Directors, said:
“The Bank of England has held fire for another month, but we think the quantitative easing gun is about to be reloaded and the order to shoot given. Whilst above target inflation has stopped the MPC pulling the trigger on a further extension in QE this month, the economic threat from weak money supply growth looms ever larger.”

Other independent forecasts, including the National Institute of Economic and Social Research, have confidently stated that the Bank of England will keep interest rates at the current record low until the middle of next year, but if inflation becomes an issue, this may well look optimistic.

And as another negative, observers point to a sluggish UK rate of growth, with a not unreasonable 1.2% in the second quarter is expected to be eclipsed by a worse figure in the third quarter, giving rise to fears of a double-dip recession.

The CBI spokesman, Lai Wah Co, came out with the following view:
“In recent weeks there has been more talk about the need to expand monetary policy, amid concerns about how quickly growth momentum will fade in the coming quarters at home and abroad. However, economic indicators still suggest the UK recovery is on track, although we expect it to be bumpy and slow.”

And the British Chambers of Commerce applauded the fact that the latest interest rates remain unchanged. Their chief economist, David Kern, said:
“The government’s tough deficit-reduction measures, although necessary to repair the public finances, will increase the threat of an economic setback. Since sustaining the recovery must remain the priority, it is absolutely vital that the MPC maintains the current low level of interest rates until the middle of 2011 at the earliest.”

Guest Article by Neil Camp

The Post Office is warning UK holidaymakers high travel credit card charges when using the plastic abroad.

And the Post Office reckons that when you take into account all the travel credit card charges, the amount people could be literally throwing down the drain is over £60 million. And this figure relates just to the remainder of 2010.

The Post Office Credit Card research report revealed that over half of those questioned in a survey, admitted that knew they would be charged a fee, by the issuer of the plastic, if they used it overseas.

Perhaps rather more worrying, some 13% didn’t know if they would be charged a fee, or not.

Az Alibhai, Head of Cards at the Post Office, said:
“This summer, millions of travellers will have wasted money on unnecessary travel credit card fees, and worryingly many are not even aware of how much this will increase their holiday spending. By using a fee-free travel credit card, like the travel credit card available from the Post Office, people can enjoy that little bit of extra cash on holiday.”

Not surprisingly, the Post Office are quick to point out the benefits of their own fee-free travel credit card, although many savvy travellers ask not only about the transaction fee, but also the exchange rate. As some experts point out, the attraction of the deal is not only based on the fee, but the exchange rate offering. And some no-fee deals will have poorer rates of foreign exchange, meaning that the user could lose out in the long run.

Travel credit card fees tend to be in the region of 2.99%, which is a hefty fee each time a purchase is made.

So users of such cards are right to be encouraged to use only travel plastic which does have no, or very low fees, but also a very favourable exchange rate. That way they can get the best deal for their holiday pounds.

Guest Article by Neil Camp

Two of the UK banks are changing chiefs.

Banks Barclays and HSBC will shortly have new faces in charge as Bob Diamond comes in as the new chief executive officer at Barclays and Stephen Green, chairman of HSBC, takes a coalition government brief to become a trade minister.

Barclays Diamond is well-named, being one of the world’s highest paid bankers who has made around £100 million as head honcho at the group’s investment arm, Barclays Capital. He will replace the current chief executive officer at Barclays, John Varley. Mr Varley is credited by many as being the safe pair of hands that steered the ban through the financial troubles of the last couple of years.

Mr Green ends a 28-year career at HSBC, one of the world’s biggest banking groups, to help the coalition government. During his tenure at HSBC, he held the post of chief executive officer for three years and the top job of chairman for four years.

BBC business guru Robert Peston said of the Green appointment, that it “…will doubtless be heralded as a coup by the prime minister, even though the record of business people in government has been patchy.” Commenting on the Barclays appointment, Mr Peston ventured the opinion that the appointment of Diamond confirmed the view that Barclays sees its future firmly as a global investment bank.

The chairman of Barclays Bank, Marcus Agius, was quoted as saying that Diamond was “…superbly qualified…”, complete with “…a proven track record as a business leader…”.

Mr Diamond responded with:
“I am honoured by the board’s confidence in me and greatly motivated by the challenge of leading Barclays during the critical period ahead. As a leading global universal bank, Barclays has the right model, the right strategy and above all the right people to deliver for all our stakeholders.”

Mr Diamond is said to be on a base salary of £1.35 million, with a bonus scheme taking his total take-home package to be nearer £12 million.

As if to ward off any criticism over Mr Diamond’s remuneration package, a Barclays spokesman said:
“The compensation arrangements have been benchmarked against a peer group of global universal banks, industrial companies and financial services institutions.”

Which proves that the banks still have some money to throw around.

Guest Article by Neil Camp

A top comparison website has joined the calls for better regulation of the growing pay day loans market.

Pay day loans have undergone a fourfold increase in popularity over the last four years, making them one of the most popular ways to raise money over a short period of time.

The idea behind pay day loans is straightforward – people can raise money on their next wage slip before its actually due. The idea is to help smooth out cashflow in difficult months.

But confused.com, along with other bodies, are saying that there needs to be more clarity over this form of borrowing.

Following a report into the high cost of credit prepared by the Office of Fair Trading, confused.com prepared their own research into these type of loans.

The research came up with a number of observations, including the main point that a number of pay day loans websites did not clearly state the charges involved. They were not clearly displayed, especially if lenders could not afford the repayment within the time limit allowed. And if that basic agreement was breached, there was little information as to what would happen then.

Furthermore, one researcher who pretended to apply for a pay day loan, was not told of any deferral charges until he had accepted the agreement in blind faith, in contradiction of basic loan ethics and set agreements laid out by the Office of Fair Trading.

Sharon Flaherty, editor of confused.com’s Consumer Focus report on pay day loans, said:
“As Consumer Focus points out, the issue with payday loans is not that they should be banned altogether, but that they should be reformed to ensure customers understand exactly what they are agreeing to, and what the charges will be if their circumstances change and they can’t meet repayments. Increased transparency is crucial.

“Confused.com has had concerns about how some payday loan companies have been operating for some time, and has voiced these concerns to the OFT. We have even been contacted by customers who have taken these types of loans and have been treated poorly by lenders when they’ve had repayment difficulties. We agree with Consumer Focus that an industry code of practice is a good idea and that there needs to be better promotion of lower cost alternatives, such as credit unions, as previously highlighted by Confused.com.”

As with any sector, there are a number of pay day loans providers who meet the requirements laid down by the Office of Fair Trading, and potential customers are warned to check that they have all the figures and facts before they enter into such agreements.

Guest Article by Neil Camp

When it comes to money, a research report from financial giant the Prudential has revealed that one in three couples are oblivious to their partner’s finances.

And the Prudential – in the dock itself currently over its abortive plans to go large in Asia – worries that if partners don’t know each other’s money situation, then they risk poverty in old age through a lack of proper financial planning.

The Prudential study concluded that nearly one third of couples (33%) who were over the age of 40, but not yet retired, did not know, or indeed fully understand, their partner’s financial retirement planning. What’s more, just over a fifth (22%) admitted that they had never talked to their partner about the idea of planning for retirement.

The research went onto reveal that its women who are less likely to discuss these money matters with their men folk. Nearly a quarter of women said they had never broached the subject, whereas only one in five men said they had never raised retirement plans.

Perhaps even more worrying, just over 10% of both men and women admitted that they were not remotely interested in their partner’s financial affairs, nevermind their financial planning.

Investments director at Prudential, Andy Brown, said:
“It is incredible that so many people do not know the details of their partner’s retirement savings. Essentially, this could mean millions of UK adults are banking on hope as their core retirement strategy and are approaching what is arguably the most important financial decision without a full understanding of their household financial situation.

“It’s astonishing that one in 10 men and women say they’re not interested in their partner’s retirement savings arrangements. Firstly, couples should strive to have open conversations with one another but they also should aim to be constructive and use these conversations to begin laying the foundations for their retirement planning. The reason this is so important is because the longer retirement planning goes unresolved.”

And it also turns out there is a north/south divide over this money awareness. Those in the north of the UK had the lowest levels of awareness, compared to the greatest awareness which was found to be couples living in the South East and East Midlands.

Guest Article by Neil Camp

The UK might be heading for a double-dip recession, which means that more people – already highly geared before the economic troubles started – are going to have to face the issue of bad credit.

A number of organisations, including Citizens Advice, are warning that the start to the new decade and for many years to come, is going to be marked by people with bad credit problems.

And to reinforce the gloomy picture, the Insolvency Service has released figures which point to a record number of Individual Voluntary Arrangements being entered into in the second quarter of the year.

The IVA Advisory Centre said that nearly 14,000 people had entered into an IVA between April and June in England and Wales. This represents a 14% increase on the previous quarter. But apart from the implications of the increase, is the fact that the level of IVAs is at an all time high. The previous ‘record’ was 13,219 entering into an Individual Voluntary Arrangement, which was reached in the last three months of 2009.

What’s more, there has been a record number of people entering a Debt Relief Order. Some 6,295 chose that route as their best way out of their financial difficulties. Ironically, say the IVA Advisory Centre, the rises in both of these types of debt agreement, has meant that people entering bankruptcy is at an all-time low since the final three months of 2007. The number of people declaring themselves bankrupt in the second quarter of the year is 14,982, some 20% down.

An IVA Advisory Centre spokesman said:
“What’s particularly noticeable now is the similarity between the number of bankruptcies and the number of IVAs. With this drop in bankruptcy numbers and the increase in IVAs, bankruptcies in Q2 outnumbered IVAs by around 1,500 (or 11%) – far less than we’ve ever seen before.

"In the first quarter of the year, for example, there were around 6,500 more bankruptcies than IVAs. At the start of last year, there were more than two new bankruptcy cases for every new IVA. Before 2005, bankruptcies tended to outnumber IVAs by a ratio of 3:1 or more.”

The IVA Advisory Centre explain this trend by pointing to a great awareness of having a choice other than bankruptcy. The spokesman continued:
“How can we explain this trend? To a significant extent, it’s due to a greater awareness of the alternatives to bankruptcy. DROs have already helped thousands who simply couldn’t afford to enter bankruptcy and couldn’t commit to the payments which most IVAs require. And IVAs have provided many borrowers with a way to enter insolvency that avoids some of the potential drawbacks of bankruptcy, such as losing their home.

“Bankruptcy may still be the best option for many of today’s struggling borrowers, but these figures clearly show that more and more are finding an IVA or DRO provides the help they need in a way that better suits their individual circumstances.”

And the IVA Advisory Centre warn all those facing the prospect of bad credit and mounting debts, to contact an expert as soon as possible. Delay causes greater problems they warn and seeking professional advice quickly, creates better options for those facing problems.

Guest Article by Neil Camp

If a finance company were to suddenly contact its customers and announce that they had underpaid on an agreement, there would be an outcry, but it would appear that the HMRC can do just that.

A finance company has to guard its reputation and image with its customers, but the HMRC will anger millions by claiming that they have underpaid tax by roughly £1,500 each.

Some lucky tax payers will get a rebate of £400.

Those effected will likely pay their tax through the Pay As You Earn system and this development does not affect Self-Assessment tax payers.

It’s reckoned that over six million people will be affected and of those, nearly 1.5 million owe an average of £1,500 apiece. The irony is that around 4.5 million have overpaid and will receive a rebate.

Figures suggest that £2 billion has been underpaid and £1.8 billion overpaid, so the Treasury is down by some 200 million. And if the Treasury is down, then action has been taken.

Many observers wonder if retrieving 200 million is worth the negative PR at a time when the austerity measures are about to cut deep. But Treasury Minister David Gauke was unrepentant, saying that it was not the place of the Government to “…just wave goodbye…” to the money that was owed by so many.

He went on to say that:
“At the moment we have said that those who owe more than £2,000 – those who are obviously in the most difficult position – we’re reviewing exactly how we’re going to do that. For those who owe less than that we will be seeking to recover that over the course of the 2011/2012 tax year through tax codes.”

As to where the HMRC appears to have got the sums wrong, it comes down to a new computer system which was introduced in 2009. It has picked up a number of discrepancies and is more accurate in its calculations. This new computer system has come at a time when there has been such a change with working practices and patterns.

Pay As You Earn was first introduced in 1940 when work was a simple affair, with most keeping one job and experiencing little change in their salaries on a yearly basis. Now with many people holding down two jobs, and commission based earnings becoming more prevalent, the Pay As You Earn system is struggling to cope.

Millions of letters are about to be posted informing tax payers of their liability, or windfall.

Some experts reckon that some individual tax payers will get a refund, as a well as a new charge, effectively cancelling out each payment.

The problems occur when the new computer system spots that contributions made via tax and national insurance using the Pay As You Earn system, do not match those on record at the HMRC.

The tax office was at pains to point out that everyone affected has a right to appeal, especially if they can demonstrate that they have provided all the necessary information in good faith.

A HMRC spokesman told the BBC that:
“The overwhelming majority of PAYE cases – over 40 million – are right, so most people have paid the right amount of tax. But for a variety of reasons in some cases there will be a discrepancy. The government accepts that the way we go about deducting tax at source needs to be much more accurate and the introduction of the NPS [computer system] paves the way for a real time system which in turn boosts accuracy.”

It can only be hoped that HMRC will come under the same scrutiny as a finance company which had come to the same conclusion about its customers’ contributions.

Guest Article by Neil Camp

Spending on debit and credit cards increased by nearly 10% in July, compared with this time last year.

The year-on-year figures for the summer month of July’s debit and credit cards spending were released by the Barclaycard Spending Index and show an upward trend of 9.9%.

Although an indication of the use of plastic in July, the Barclaycard Spending Index does not take into account cash payments, nor does it adjust for price increases/decreases. It reflects only the value of debit and credit card spending that is processed through the Barclaycard clearing system.

The figures lead Barclaycard to the conclusion that the traditional sales and retailer discounts offered in the summer months have boosted consumer spending, which challenges much of the opinions that confidence in the consumer market has slipped.

Looking at the figures also reveals that the year-on-year returns have shown a steady increase since the start of 2010 and that July is the third month this year that the figures have increased by plus 9%.

Head of Barclaycard UK Payment Acceptance, Stuart Neal, said:
“If consumer confidence is taking a hit, it’s not happening on the high street. If spending remains at this level compared to last year, 2010 could prove overall to be a very good year for retailers.”

But although the year-on-year figures look strong, the July to June 2010 figures only show a slight increase of a touch under 2%. Barclaycard say that this might be down to consumers taking advantage of earlier sales in June as some retailers rushed out discounted items.

As to the Barclaycard Spending Index itself, it is based on spending by all debit and credit cards across 44 retail sectors. And the retailers analysed are those that use Barclaycard Payment Acceptance to process their transactions.

In all, the organisation accounts for 30% of the market, processing debit and credit card payments for 85,000 businesses in the UK.

Guest Article by Neil Camp

Northern Rock may well be better known for its history in the mortgage business, but it has a whole raft of products on offer to customers, including a just launched Issue 2 of the Little Rock Fixed Rate Bond.

Its mortgage business aside, Northern Rock has been a major player in the children’s savings bond market and the launch of Issue 1 of the Little Rock Fixed Rate Bond, which was originally launched in early August, was a great success.

Northern Rock are keen to point out that Issue 2 of the Little Rock Fixed rate Bond is a three-year investment vehicle and offers a highly competitive rate of interest for only a one pound minimum deposit.

Anyone under the age of 16 can open an account, accompanied by the name of an adult acting as account trustee. Those holding an account are known as ‘Little Rockers’.

Those wishing to open an account can do so from a branch of Northern Rock, or via a postal application. A choice of free gifts are also available for those opening a new account.

Cash, cheque, or transfer can be used to open an account and no more than £20,000 can be paid in. Withdrawals are not permitted before 1 October, 2013, the time when the account reaches maturity. Northern Rock reminds its customers that the account is a limited issue which can be withdrawn from new entrants at any time. Also, the account is non-redeemable.

Interest is paid annually on 31 August and is offered at 4% gross per annum.

Given its recent difficulties and track record in the mortgage business of the original Northern Rock, it’s no surprise that the institution is at pains to highlight its new openness.

The announcement accompanying news of the Issue 2 of the Little Rock Fixed Rate Bond comes with the declaration:
“In keeping with Northern Rock’s commitment to providing openness, transparency, and fair treatment of customers, full product details for Northern Rock accounts are available on application in the Terms and Conditions.”

Guest Article by Neil Camp

Debt loans are becoming increasingly important as companies like Debt Free Direct are warning consumers that personal insolvencies have increased 5% year-on-year.

The company Debt Free Direct has issued a warning to consumers to seek debt advice as soon as they can once they feel that their personal finances are getting out of control. And increasingly debt loans will play a major role in the coming years as people struggle to make ends meet. The Insolvency Service has released figures that show a worrying increase in the number of personal insolvencies; this year alone it had increased by 5% on the same period last year.

This report reveals that 34,743 people in England and Wales have become insolvent in the three months before June; there is some comfort in the fact that this is a 2.6% decrease from the first quarter of 2010. However, experts believe that this continually high rise in insolvency figures will continue on through the year and into the next, and warn that there is the possibility of another sharp increase.

The exact composition of the insolvencies are as follows: there were 14,982 reported bankruptcies, 13,466 Individual Voluntary Arrangements and 6,295 Debt Relief Orders. Whilst bankruptcies were down 20.6% from last year, Individual Voluntary Arrangements were up by 10%.

Commenting on the statistics, Derek Oakley, Debt Free Direct’s Insolvency Director, said: “This 5% year-on-year increase in personal insolvencies shows consumers are still struggling in the wake of the credit crisis. Consumers are advised to continue to be cautious with their finances and seek debt advice sooner rather than later if they are experiencing difficulties meeting their financial commitments.”

There are a multitude of factors that can contribute to personal insolvency: government cuts to public spending, redundancies, tax increases, increased interest rates, all of these have been attributed to the rising number of insolvencies.

It is no wonder, then, that debt loans are on the increase. With the strain of the current economic climate, people are desperate to find ways to keep themselves out of the red.

Guest Article by Neil Camp