Interest rate cap could lead to credit card debt being halved
It has been claimed by industry officials that a cap on interest rates that are being charged on credit cards could result in credit card debt being halved across the country. It is thought that collective credit card debt in the UK could be cut by as much as 50 percent in the event that a cap is introduced on credit card interest rates.
The Treasury recently announced that it was carrying out a review into personal finance in the UK, and part of the measures that are launched to try and address issues relating to consumer finance and debt could be a cap on credit card interest rates, which are known for being notoriously high. The gap between the base interest rate, which is at an all time low of just 0.5 percent, and credit card interest rates has been widening, and this has caused concern amongst consumers, campaigners, and officials.
The global financial crisis and the recession has resulted in more and more people having to turn to borrowing in order to make ends meet financially, with many having to use savings, loans, overdrafts, and credit cards simply to pay things like bills, mortgage repayments, rent, and everyday living expenses. Over the past couple of years many have used credit cards to fund everyday expenses, and many have paid a huge amount of interest on this borrowing because of the high rates charged on so many credit cards.
One industry official from the UK Insolvency Helpline said that curbing the level of interest that credit card firms could charge on borrowing would make a huge difference to the level of credit card debt. He added that the review may possibly look at placing upper limits on the amount that could be spent on credit and store cards.
Banks unable to sell PPI with credit cards and financial products
A decision has been made by the Competition Commission in the UK that banks will no longer be able to sell Payment Protection Insurance or PPI alongside financial products such as credit cards and loans. The move comes after years of controversy over this insurance, which is said to have been mis-sold to many borrowers.
As part of the ruling banks will be banned from selling the insurance to consumers at the same time as a loan, credit card, or other type of finance. This will come as good news to many consumers, as it means that they will no longer face the pressure of being sold PPI when taking out finance, and will have the freedom to go elsewhere and find affordable cover if they do decide that they want the protection that the insurance offers. Banks have argued that this will cause inconvenience for consumers, but the Competition Commission said that banks were ‘overstating the loss of convenience’ that borrowers would experience.
PPI is designed to cover repayments on finance for a fixed period of time if the policyholder cannot work due to redundancy, accident, or sickness. However, an investigation carried out into the PPI sector found that in the past the cover had been sold to many people that could not claim, had been added to credit deals without the borrower knowing, or had been forced onto consumers by making them believe that they had to take it out in order to get the finance that they wanted.
The deputy chairman of the Competition Commission, Peter Davis, stated: “These reforms will mean that PPI providers will, in future, face real competition where there is currently little, and, in consequence, the prices consumers currently pay for PPI will fall significantly.”
Give a little with charity credit cards
Giving to charity is something that many people strive to do, but times are hard for many households after the recent, deep recession, and many simply cannot afford to make regular donations to charity, as much as they would like to. The recession has affected household finances quite profoundly in some cases, and as a result of this it is not only businesses that have suffered as a result of financial losses but also charities.
One thing that many people have started doing over the past couple of years is using a credit card, as many have found that with finances overstretched having a card on hand has become vital. There are many different types of credit card available these days, and people tend to choose the card that will most closely match their needs, as well as their spending and repayment habits.
One type of credit card that could benefit those that want to give a little back is the charity credit card. You can charity credit cards for a wide range of different charities, such as cancer charities, heart charities, animal charities, children’s charities, and many others. This means that you can choose your favourite type of charity and get a credit card that will contribute to that charity.
The way in which charity credit cards work is similar to the way in which rewards based credit cards work. When you spend money on the credit card a percentage of the amount that you spend will go to the specified charity, so each time you use the card you will be giving to charity.
The great thing about using these charity credit cards is that you do not have to worry about budgeting to give to charity or setting up a payment scheme to contribute to your charity, and you don’t have to feel guilty because of not being able to give to charity. Each time you use the card money will be accruing to go to your chosen charity, so you will be giving without having to do anything yourself.
Many of these charity credit cards also donate a lump sum when you apply for the card and are accepted, so this also boosts the amount that your chosen charity gets as a result of your charity credit card. You can easily browse the different charity credit cards online, making it easy to find the right card and a suitable charity.
Transfer the balance from your high rate credit card
Credit cards are well known for being costly for consumers, and the high rate of interest charged on many credit cards has caused a lot of controversy. With the base rate having been at just 0.5 percent for the past nineteen months, which is the lowest rate in the history of the Bank of England, many are concerned that the gap is widening more and more between average credit card rates and the base rate.
Over the past few years many people have been using their credit cards more than they used to, and this is because of the global financial crisis and recession that has left many struggling financially, making them more reliant on credit cards. This has resulted in many borrowers having one or even several credit cards with balances on them.
For those that have one or more credit cards that charge interest it is well worth considering switching all of the balances onto one more affordable card in order to increase convenience and save money on interest payments. This is something that can be done with an interest free balance transfer card, and there are a number of deals available from different providers when it comes to 0% balance transfer cards.
When you transfer debt onto an interest free balance transfer card you can transfer balances from one or more of your cards as long as the total amount transferred is within the credit limit on your balance transfer card. The interest free periods on these 0 percent balance transfer cards will vary based on the provider you go through and the card you choose, so it is advisable to find a card that offers as generous an interest free period as possible.
Once you have transferred the balance from your high rate credit cards you will then end up with one combined credit card debt. This is far more convenient than having number of debts on different credit cards from various providers. More importantly, depending on the interest free period on the card you will have a generous amount of time to repay the combined balance without being charged any interest.
Using an interest free balance transfer credit card is the most effective way to both combine and save on your existing credit card debts, and this can shave a small fortune on the amount that you will pay on your overall credit card debt.
Millions of people have a year or more of credit card debt
Recent research has revealed that there are millions of people in the UK that have credit card debt that they have had for a year or more. Whilst some people clear their credit card balances in full each month many others spread their repayments over a period of time, and the study shows that more than six million people have had a balance on their cards for a year or more.
The research was carried out by moneysupermarket.com, and the results showed how many people are struggling to repay their credit card balances in the current financial climate. Around 10 percent of people polled as part of the study said that they only made the minimum repayment on their credit card balances, and these are the people that could be repaying the same debt for years to come.
Officials are concerned that in the current climate many people are only able to make minimum repayments on their credit card debts, and some people may not fully understand the implications of this, which are paying huge amounts in interest over the term of the debt, and the debt lasting for many years because the repayments barely cover the interest each month.
An official involved in the research said: ‘Our research reveals credit cards are still playing an important role in the nation’s finances, but in the current climate, it’s more important than ever for consumers to understand the cheapest way to borrow on their cards and avoid getting stung by high interest rates. The most important thing is that consumers understand the implications of borrowing on a credit card and that paying back the minimum amount each month will dramatically increase the total amount they pay back in the long run.’