Inflexible Friends and Plastic Assets, Why Money isn't Buying Love Anymore
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 uSwitch. 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.
Rachel writes for the personal finance blog Cashzilla.
Cashzilla is a psychological, technological manifestation of the financial pressure Rachel faced when she graduated from her very expensive, much extended degree.
Rachel uses Cashzilla as online therapy for the state of her finances.
Rachel has used http://www.moneynet.co.uk/ and http://www.creditaction.org.uk/ in the references for this article.
MORE RESOURCES:
Bush: US will work with partners on credit crisis The Associated Press - WASHINGTON (AP) — President Bush says world's wealthiest industrial countries will work together to attack the credit crisis spreading around the globe. ... World Leaders Offer Unity But No Steps To Ease Crisis Bush vows coordination with world powers on financial crisis Time to Act |
 Boston Globe | Without real leadership, we face disaster guardian.co.uk, UK - There is a combination of a worldwide bank run, seizure of credit markets and collapse of asset values that could plunge the globe into a depression. ... Video: Overseas Markets Fall on Financial Turmoil Fears Asian credit default costs soar to record - traders Stocks rally fades on credit market worries |
 The Associated Press | US will work with partners on credit crisis: Bush CBC.ca, Canada - It was the 21st time in 26 days that the president has spoken publicly about the credit crisis gripping financial markets and dragging down stock markets. ... Video: Bush: 'We Must Work Collaborately to End Crisis' |
Is my credit union safe? Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer The government-run National Credit Union Share Insurance Fund insures most deposits at credit unions, ... Credit unions alternative to banks Got Your Money in a Credit Union? You Too Are Safe In tumultuous financial times, credit unions might be an option to ... |
 China Daily | Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion Washington Post, United States - By Heather Landy NEW YORK, Oct. 10 -- In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance ... STOP FINANCIAL WMD'S: Credit Default Swaps Lehman Credit-Swap Auction Sets Payout of 91.38 Cents (Update1) Insurance on Lehman Debt Is the Industry’s Next Test |
 BBC News | Credit crisis should not hurt poor, ministers urge Reuters - By Lesley Wroughton WASHINGTON (Reuters) - Major economies should not use the global credit crunch as an excuse to renege on aid promises to poor countries ... Video: IMF: Timing right for G7 Credit CRISIS ALERT IMF endorses plan by rich countries to fight credit crisis |
 Los Angeles Times | Fears Grow That Tight Credit Could Crush GM, Ford NPR - Standard & Poor's downgraded the credit of both companies and their financing arms this week. AFP/Getty Images Ford F-150 trucks sit at a dealership in ... Video: Money Minute: GM, GE, Oil CREDIT WATCH HITS GM, FORD GM, Ford too big to fail? |
Is the era of easy credit over for the long haul? International Herald Tribune, France - For Clark, and for a nation of consumers heavily dependent on credit, there are growing signs that those rough times could prove to be more than just a ... |
 WNCT | Anatomy of the American Financial Crisis: How It is Turning into a ... Center for Research on Globalization, Canada - Its failure created a domino effect among other international banks that had lent to each other in the international credit chain. ... Where did all that 'lost' money go? Credit freeze sees small cracks Market news this week for strong stomachs |
Financial troubles spread to credit unions Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer It's not just giant banks on the brink these days: Losses are clobbering nonprofit credit unions that ... |
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