A top comparison website has revealed a dubious distinction for the inhabitants of Yorkshire: that it’s the UK region most likely to struggle when it comes to meeting credit card payments.

The good folk at confused.com have risked the wrath of those living in God’s promised land by saying that in the UK, the closure of one in five accounts by the provider was due to non-payment. And Yorkshire residents exceed the national average by 13%, with 35% of accounts closed by the provider due to repayment failure.

But before thoughts of bringing out that old hackneyed debate about the north and south divide, the research also reveals that the North East is best at repaying with only 8% having their accounts closed for not meeting monthly payments. And, a close second to Yorkshire is the South East, 33% of which have suffered the same penalty. Incidentally, alongside the North East’s exemplary residents were the people of east Anglia, who also only had 8% of defaulters.

Head of credit cards at Confused.com, Joanne Garcia, said:
“Credit card users in all regions need to understand how damaging it can be to miss repayments. While it may not seem like a big deal to miss a few payments here and there, credit providers – which include mortgage lenders – leave no stone unturned when it comes to checking a person’s credit worthiness. It they see a history of non-payments it makes it much more difficult to borrow money.

The research at confused.com, which is owned by the Admiral Group plc don’t say how many people they asked, or how they got their figures, but it is hoped that they have done their homework about the Yorkshire figures. Although confused.com should know what it’s talking about of course, as it generates over one million quotes per month. From its origins in 2002, it has expanded its range of comparison products to include car insurance, home insurance, travel insurance, pet insurance, van insurance, motorbike insurance, breakdown cover and energy suppliers, together with financial services products such as credit cards, loans, mortgages and life insurance.

Guest Article by Neil Camp 

As the number of equity loans increase as a desperate way of raising cash as the recession continues, observers are urging those considering such a step to proceed with caution.

A number of consumer groups have warned that taking out equity release mortgages in a falling market can be a recipe for disaster. House prices have already dropped 25% and experts are undecided as to whether the falls will continue, or bottom out.

Equity release mortgages are up nearly 20% and they are popular with mature homeowners who have been trying to get by on depleted savings and pensions.

The equity release market is worth some £1.2 billion a year. Some mortgage advisors stand accused of talking potential clients into taking out bigger loans than they actually need, in order to boost the levels of commissions. And the Financial Services Authority found that in 2005, advisers were not properly warning potential clients about some of the pitfalls, including higher tax rates and the disqualification from certain benefit schemes.

The average amount being released by homeowners is around £50,000 and with falling property prices, there would be less equity around to utilise.

But equity release mortgage advisors have hit back saying that after 15 years of major increases in equity in houses, there is still plenty of flexibility for most householders. They maintain that it remains one of the best ways of utilising money that otherwise cannot be touched.

But consumer groups have warned people contemplating such a move, that they should consider a whole array of products that might be better suited to raising money via bricks and mortar.

Guest Article by Neil Camp

Financial watchdogs are warning that banks can literally plunder their customer’s bank accounts to settle unpaid bills in other parts of their empire.

Stories are emerging of people hitting financial trouble, not paying their unsecured commitments (mostly credit cards and loans) and keeping their money in their current, or saving accounts for their secured loans such as mortgages. And, unbeknown to the customer, the bank can legally come along and use the money sitting in the current, or savings account, to pay a missed credit card bill, leaving the customer vulnerable to a missed mortgage payment.

And all this is quite legal, going under the term ‘setting off.’ Many will be surprised to hear that banks are perfectly entitled to ‘Set-Off’, or combine accounts, if they think fit. The ‘Set-Off’ clause is written into many loan contracts, and account terms and conditions, and even if it isn’t, then a bank may still have to the right to take such action.

So, for people facing trouble, the advice is to use two completely separate financial institutions in which to hold a current and a savings account. This way, a bank will not be able to play around with a person’s accounts, balancing the books without recourse to their customers’ wishes.

There is an obscure guideline that banks have to let you know if they decide to take such action, especially if the accounts are in joint names, if it’s a swap between different companies within the same group, or involving business accounts. But people shouldn’t rely on this and in the case of a simple current and savings bank account, the bank can seemingly act without any notice at all.

And the banks should certainly not go ahead with such an action if, for some reason, the account and its balance is in dispute. Nor can the bank say grab the whole amount outstanding on the loan, only the amount overdue, but the rules seem blurred in this area. The banks certainly should tell you after they have taken the money from an account to set-of against others, but there’s no rule as to when they should let the customer know.

The Citizens Advice Bureau has reported that there is growing evidence that this Set-Off rule is being increasingly used by banks. Set-of enquiries have risen by a considerable 25% in the past couple of years.

What worries some in the consumer watchdog institutions, is that the banks are going to be get more and more aggressive with how they use the Set-Off rule, with some complaining that this provision gives them carte blanche to unfairly meddle in their customers’ accounts for their own benefit.

For example, it’s predicted that a bank could technically reduce a customer’s account credit card limit by say £200, then use money in the customer’s current account to make good the difference they have just created. An alarming prospect for many.

Of course, given the economic climate, banks should be more sympathetic to their customer’s problems and should not use ‘Set-Off’ without proper consideration of the effects. And people who are being affected, are being strongly advised to complain in writing to their banks, or inform the Financial Ombudsman Service.

Guest Article by Neil Camp