Finances 101

July 29th, 2011

The banking giant Santander has set aside 620m euros (£548m) to cover the costs of mis-selling payment protection insurance (PPI) in the UK. The Spanish bank is the latest to outline the one-off amount to cover the cost of compensation for mis-selling the loan insurance.

Lloyds Banking Group set aside £3.2bn to cover the cost of this compensation, followed by Barclays (£1bn), RBS (£850m) and HSBC (£269m).

The move hit Santander’s profits. The UK arm of the bank, which includes the Abbey, Alliance and Leicester and Bradford and Bingley brands, saw pre-tax profits dip 3% to £1.2bn in the six months to June.

The parent company Banco Santander reported a first-half net profit of 3.5 billion euros, down 21%.

PPI is supposed to cover loan repayments if someone becomes ill or loses their job, but it has emerged that many of the policies sold by the banks were mis-sold. This blog has been following the consumer campaign with great interest.

In April, the banking industry lost its High Court challenge to new rules on the sale of PPI. Among other things, the rules require sellers of PPI polices to review all their past sales to see if their customers have a claim for mis-selling, whether or not they have actually complained.

While the legal case was going on the banks put on hold tens of thousands of fresh PPI complaints that came in.

Santander was second, behind Barclays, in the list of most complained-about financial institutions during the second half of 2010. The data, compiled by the City watchdog – the Financial Services Authority, was driven, in part, by PPI complaints.

The Santander chief executive said the bank had taken ‘significant steps’ to improve customer service. Earlier in July, Santander said it had brought its call centres back to the UK from India following complaints.

Unless you happen to be a shareholder in the Santander banking group this is excellent news. Hitting banks in the profits is the best and possibly only way to influence their actions. If their dodgy practices and lack of concern for their own customers starts to cost them money then they will quickly change their ways.

This entry was posted on Friday, July 29th, 2011 at 2:12 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

August 19th, 2011

Despite the weak growth figures and summer holiday season inflation continues apace. In fact, the UK government’s targeted rate of inflation rose in July, following higher prices for clothing and footwear and fees for financial services.

The rate of Consumer Prices Index (CPI) inflation rose to 4.4% from 4.2% in June, according to figures from the Office for National Statistics (ONS). The Retail Prices Index (RPI) measure was unchanged at 5%.

Clothing and footwear prices measured for CPI saw their biggest annual increase since records began in 1997.

Bank of England governor Mervyn King has written another letter to the chancellor to explain why CPI inflation remains well above the 2% target rate. The governor must write a letter every three months if CPI is more than one percentage point above or below the target.

He blamed the continuing high inflation rate on, “the increase in the standard rate of VAT to 20%, and past increases in global energy prices and import prices”. It is worth noting that he also stressed that “the big risks currently facing the UK economy come from the rest of the world”.

The Bank of England said last week that it remained confident that inflation would return to its target level in the next two years.

Chancellor George Osborne replied to Mr King’s letter saying that, “A crisis of confidence in the global economy demands a global response”. He called for credible cuts in countries with big deficits and a “rebalancing of global demand to support growth”.

The ONS said the main contributors to inflation came from financial services, clothing and footwear, furniture, household equipment and housing rent. It said one of the biggest contributions had come from fees for financial services, which rose in July but had fallen in the same month last year.

The main downward pressure on inflation came from food and non-alcoholic drinks.

The big picture is still that rises in energy prices and in particular the VAT hike at the start of the year are still keeping inflation high. At constant tax rates, CPI inflation was 2.8% in July.

July’s inflation figures are particularly important because they are used to determine how much regulated rail fares can increase. Under the government’s new formula, fares will be able to rise by RPI+3%, which means average fares will be able to go up by 8% next year.

In other research, Kantar Worldpanel found that while grocery price inflation had grown 5.2% in the 12 weeks to 7 August, compared with the same period the previous year, grocery sales had only risen by 3.8%.

This shows that shoppers are trying to manage their ‘personal’ inflation by trading down. It’s therefore unsurprising that the discount retailers have pushed further ahead this month. Aldi performed particularly strongly, taking its market share to 3.6% from 3% at the same time last year.

This entry was posted on Friday, August 19th, 2011 at 1:20 pm and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

June 12th, 2011

This week, UK interest rates were kept at the record low of 0.5% again by the Bank of England’s Monetary Policy Committee. Economists had widely expected the decision, as recent data has underlined worries about the strength of the UK’s recovery.

The decision comes despite the annual rate of inflation rising to 4.5% in April, up from 4% in March, and well above the Bank’s 2% target and is the 27th straight month that the bank has left rates unchanged.

Meanwhile, the European Central Bank’s president, Jean-Claude Trichet, has signalled that its interest rate could rise next month. The ECB on Thursday held rates at 1.25%, but Mr Trichet said the bank would maintain “strong vigilance” on inflation – widely interpreted as a signal to the markets that rates will be raised at the next meeting.

Analysts believe that continuing high UK inflation also made a rate rise by the MPC likely this year, some analysts believe this could come as soon as next month although that view is not widely held.

In fact, poor UK economic data has led some economists to push back expectations for the timing of the first UK rate hike as far as March next year.

However, with inflation likely to move above 5% in the next three to four months on the back of rising utility bills and food prices and with employment and employment intentions surveys remaining firm, the balance of probabilities favours an earlier move.

Economists say policymakers face a difficult choice: keep rates on hold to help the economy, or raise them to cool inflation. But higher rates increase the cost of borrowing, and there are concerns this may hurt the economic recovery.

The record low Bank rate has led to relatively small returns for savers. The latest statistics from the Bank of England show that, at the end of May, the average rate of interest with an instant access bank or building society account was 0.3%. This has been unchanged since a slight rise at the start of the year.

For cash Individual Savings Accounts, the average interest rate was 0.55%. Three years earlier, this had been 4.56%. However, as long as the Bank rate is low, borrowers – especially those with variable rate mortgages – are seeing relatively low home loan repayments.

This entry was posted on Sunday, June 12th, 2011 at 1:47 pm and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

June 5th, 2011

The cost of going bankrupt increased by £75 to £525 at the beginning of June leading debt experts and other analysts to suggest that the cost could discourage people with debt or other financial problems from seeking help.

If you include the court fee necessary to complete the process, going bankrupt now incurs an upfront cost of £700. The Insolvency Service said the increase was needed to cover the cost of administration and the charges, including court fees, have gone up by 37% since March last year.

However, insolvency practitioners have warned that the increase will put extra pressure on individuals who were likely to be under stress or depressed.

The £525 charge is a deposit to cover the cost of managing a bankruptcy, which allows the bankrupt person to throw off the burden of debt and make a fresh start. The Insolvency Service recovers a full administration fee of £1,715, less the deposit, from the bankrupt’s assets or surplus income at a later stage. This sum is not being increased.

The overall fee is staying the same but they are increasing the proportion of it paid upfront when the bankruptcy process is begun. The Insolvency Service has seen its income squeezed because of the falling value of homes and other assets which are recovered from bankrupts.

Currently, the £1,715 fee is never fully paid in half of bankruptcies.

There has been some criticism of the rising cost, with National Debtline that there are some people for whom bankruptcy would be the best solution to their debt problem, but for the fact they cannot afford the associated fees.

There is now a cheaper and easier alternative, the Debt Relief Order (DRO), which costs £90.
An increasing number of people who are in financial trouble and looking to escape their debts have been avoiding bankruptcy and taking this lower cost route.

In the first quarter of this year there were 6,788 DROs, a 20% rise on the previous year.
However, people can only ask for a DRO if their debts are less than £15,000 and savings and assets are less than £300.

This leaves the glaring question of what to do if you have £16,000 of debt or more. You are faced with a barrier of hundreds of pounds before you can opt for bankruptcy to resolve your difficulties.

Responding to the criticism, the Insolvency Service pointed out that it is obliged by Parliament to break even, a task which has become increasingly difficult but will be made more realistic if they can recover more of their costs at the beginning of an often long and expensive process.

It is right that bankrupts pay something towards their debts and the Insolvency Service exists to strike a balance between giving bankrupts debt relief and a fresh start, and the need to provide some return to creditors.

This entry was posted on Sunday, June 5th, 2011 at 9:47 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

June 28th, 2011

A new sense of fiscal responsibility has been seen on the UK high street as credit card use fell last year as people turned to cash and debit cards to avoid borrowing, according to the nation’s shopkeepers.

The British Retail Consortium (BRC) which represents 90% of the UK’s stores, say transactions involving credit cards dropped 12.9%.

The number of transactions involving cash also fell, although the average amount spent rose by 13% to £12.93. Debit card use jumped by 15.8%.

The BRC has criticised the level of bank charges associated with credit cards. It pointed out they are the most expensive payments they have to process.

On average in 2010, each retailer paid 1.7p per cash transaction to have the money transported and banked. However, the average charge for processing a credit card payment was 37.1p, compared with a debit card average of 9.2p. Thanks to the business incubation guys over at NewInternetIdeas.com for this information.

Credit cards were used in just 10% of all transaction, but accounted to more than 44% of processing costs.

The BRC added that cash was the quickest way to pay. Using physical money took an average of 27.2 seconds, it said, compared with an average 39.4 seconds for a card payment.

The BRC’s annual Cost of Payment Collection Survey includes results from nearly eight billion transactions in store and online, 60% of the UK’s annual retail sales.

Retailers reported fraud losses had fallen by 37% compared with 2009 after investment in technology, such as the latest secure card readers, new levels of internet security and note checkers at tills.

The figures presented by the BRC show a clear pattern. Hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got. At the same time, use of credit cards has dropped sharply. Cash remains dominant and was used for more than half of all retail payments.

What remains to be seen, and cannot be demonstrated by this data, is whether or not this pattern represents a growing maturity among the British public with regards to their spending habits or rather their restraint by default because they cannot get credit. Thanks to the guys over at ideasforabusiness.co.uk for this.

This entry was posted on Tuesday, June 28th, 2011 at 1:58 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Mortgage loans are in essence debts paid out exclusively to allow someone to buy a home. So, if you are planning to buy a home, you can apply for mortgage loans to banks, financial institutions, private lenders, or specialized mortgage brokers. There are different kinds of mortgage loans available, at different rates. And, you must try and find the best rates and programs, by searching through a huge number of lenders. The right decision could mean saving thousands of dollars on mortgage payments every year.

While taking a loan, it is important to understand the terms of your mortgage in case you get into trouble. As in most of life’s major decisions, the stakes are high and the trade-offs require careful consideration. Above all, they require a careful examination of your resources, your aspirations, and your personal priorities.

The first thing most of us think about, when it comes to mortgage loans on a new home, is the interest rate. That’s both perfectly natural and sensible. The interest rate we pay can make an immense difference, amounting to tens of thousands of dollars, in the ultimate cost of the house. Still, interest rates are not the only thing worth thinking about, concerning mortgages loans. Some other important variables need to be considered too.

One is the question of whether to take a fixed interest rate or choose from among the many variable-rate mortgages loans, created over the years to meet the different needs of different buyers. Another important variable that needs to be thought about is the rather basic question of the term of the mortgage loans. How long do you want your mortgage loans to run? Even with fixed-rate mortgage loans, there is available, a broad spectrum of time spans to choose from. And in most cases the extremes are, 15 years on the short side, 30 years on the long.

The amount that you would finally have spent on the house can increase to several thousands of dollars if your mortgage loan term is too long. Even at a modest interest rate, money in a savings account can double within 10 years or less. So, opt for mortgage loans of only 15 to 20 years. But to do that without reducing the initial size of your mortgage, you will have to make bigger payments every month. But this decision is dependant on each people lifestyle and priorities.

Someone who’s willing to make near-term lifestyle sacrifices for the sake of long-term gains probably will prefer shorter mortgage loans. But, if your motto is eat, drink, and be merry, the idea of squeezing extra money out of your budget for the sake of a bigger house payment won’t hold much appeal.

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I have been reviewing through a large number of Lending Club loans and noticed some humorous descriptions of the reasons why people want the loan. These should serve as advice for anyone who is planning to write up a Lending Club loan application. Remember that most all lenders are investors and want their money back with interest. The main reason that people loan borrowers money is not because you need it but because they believe that you can and will pay back the loan.

Loans are similar to requesting a tourist visa to come to visit the US — the person deciding whether to give the potential visitor the visa wants to know the reason you want to visit mainly to see that it is reasonable. The main thing that they want to know is that you plan to return to your country after you visit.

Despite popular belief, small business loans are easier to get than they were just a few months ago. UnsecuredBizLoan.com is helping connect small businesses with the capital they need to grow and flourish in a tough economy.

American Fork, UT (PRWEB) February 2, 2010 — The economic situation of 2009 was enough to make small businesses forget their hopes for obtaining small business loans. They were nearly impossible to come by. However, increased pressure from the federal government late last year led to an increase in small business loans with numbers showing a veritable spike in the first quarter of the federal government’s 2010 fiscal year.

“2010 is the perfect time to get a small business loan because there are so many options available right now,” said Daniel Drew of UnsecuredBizLoan.com. “There are SBA loans, there are unsecured business loans, and business lines of credit all available for small businesses with good credit scores.”

UnsecuredBizLoan.com is part of an unsecured loan/line of credit group that serves as a nationally recognized business finance consultancy. The success of UnsecuredBizLoan.com lies in their established network of regional and national banks, credit unions, SBA, conventional and non-conventional lending institutions, allowing them to match small businesses with the lending institutions that best fit their needs for business financing.

“At UnsecuredBizLoan.com we just want small businesses to know that there is money available to help them reach their goals. The best part of our unsecured small business loans is that you don’t have to provide an extensive business plan describing exactly how the funding is to be used. We help you get the money, and you use it to your discretion.”

UnsecuredBizLoan.com helps small businesses get unsecured business loans of up to $25,000 for new businesses and $35,000 for existing businesses. They also assist businesses to acquire business lines of credit ranging from $50,000 to $750,000. If your small business is about to turn the corner, and needs additional funding to grow, contact UnsecuredBizLoan.com to find out how easy getting approved for an unsecured small business loan can be.

About UnsecuredBizLoan.com
UnsecuredBizLoan.com offers Business Lines of Credit Online, Small Business Loans, Small Business Loans, Unsecured Business Lines of Credit, and SBA Loans. Soon the company will offer Business Cash Advance Loans.

Based in Lehi, Utah our unsecured small business loans are available for businesses inside the United States.

The New York Times reported that the Bank of America wrote off 33.7 billion in bad loans in 2009. This was more than double the amount of the 16.2 billion written off in 2008. It’s no surprise that in the 4th quarter 2009, Bank of America stopped offering personal loans.

Bad Credit Loans

They’re not the only bank that wrote off bad loans. The loans the banks were hit hardest by were made to consumers with bad credit. Rather than the possibility of writing off more debt in 2010, banks aren’t approving as many bad credit loans. This means if you need a personal loan and your credit isn’t great, you may not get the loan. In fact, it may make more sense to repair your credit prior to applying for a personal loan.

Credit

Your three digit FICO (credit) score is viewed as possibly the most important factor regarding whether or not a bank will underwrite a loan for you. That’s because it gives lenders an instant idea of how well you’ve managed your money over the past several years.

If you made your payments late or missed them entirely, your score will plummet. If you have a bankruptcy or foreclosure in your financial past, your score will really drop. At some point you’ll have to apply for a bad credit loan.

If you are able to get one (in the face of the information above), you’ll pay higher interest rates and higher origination fees.

If your score is below 620 you’re considered a credit risk. If you’re score is 720 or higher, you will generally qualify for the best loan products and the most favorable interest rates.

Personal Loans

Many banks have ramped up their personal loan operations in 2010.  So loans may be available. However, your personal loan options will be limited if you have poor credit.

Basically bad credit loans are given to debtors who have poor bad credit scores as a result they are forced to pay higher interest when compared to regular loans. This type of loan causes extra burden for debtors and you can get mortgage loans from many companies in the market but be cautious before taking decision ,since there are many hoax companies they would cost higher interest and additional fees and this make our situation worse.

So one day I surfed internet to find a best mortgage broker in the market and I found that anycreditmortgage.biz is doing a great job in satisfying the desires of millions of customers. They are helping you in suggesting right lenders for make use of service, just fill out the zip code and click the button and you will be amazed to see wide range of options. There are many ways to get home mortgage loan even though if you have bad credit and the best is to compare the prices of various mortgage companies and find the difference. If you want to know how to get mortgage loan with bad credit scores, then just visit our web portal to get good exposures on mortgage loans and save your money.

To “pop a cap” is a common and mostly American piece of street parlance meaning to shoot someone or something. Now I’m not here to propagate the shooting of mortgage brokers or the riddling of bullet holes in your home loan agreement (as much of a thrill as it may be). What I am here to talk about is the popping of a different kind of cap. Last week, Bankwest launched Australia’s first capped home loan, the Bankwest Capped Rate Home Loan, a move which is likely to cause quite a stir in the home mortgage market.

So, what exactly is a capped home loan? Well the basic premise is this – for a fee, Bankwest are guaranteeing that the interest rate on your home loan will not go above a certain level (7.5%) until November 2011. Bankwest will first put you on a variable rate (currently at 5.4%) and if the rates go down you will pay less, but when they go up you’ll only pay up to the maximum rate. Bankwest is essentially selling ‘peace of mind’ given RBA increases are now a reality and the inevitable recovery of world economies after the global financial crisis.

It sounds like a no-brainer – competitive rate, a guarantee on rates for 3 years all for a nominal fee  - or so Bankwest would have you believe. What’s the catch you say? First off, you’re paying more than you would for a normal loan in fees. To get the cap, you have to fork out a fee (0.15% of the loan amount). If you’re borrowing $250,000 for example, this fee totals $375. Moreover, unlike any other variable rate loan by Bankwest, the exit fees for leaving is set at 1% of the loan outstanding at the time of exit – quite a sizeable amount if you’re only 2 years into paying off a loan of that size.

The real deal breaker in the whole equation however is the capped rate. Is it worth paying the extra fees to safeguard against interest rates going above 7.5%? Will rate rises go above and beyond the 2.1% needed to make the cap effective? Only time will tell, but it is a lot of interest rate rises in just 3 years. Moreover, if you are worried by rising interest rates perhaps you would derive more security in fixing all or part of your loan? Bankwest’s 3 year fixed rate is a good 40 basis points lower than the cap’s upper limit.

Despite the potential drawbacks, this home loan product could be heralded as the opening salvo of what is sure to be an intriguing period in the Australian home loan market as interest rates begin to rise. What will be interesting is to see how the market, particularly, the ‘Big Four Banks’, respond to Bankwest’s initiative. Watch this space, as there’s sure to be plenty more shots fired in the coming months.

So the year has finally come to an end.  Thank the Lord.  What a year ah?  I think back to January and all that has happened in 12 months, it’s just been crazy.  As far as business loans go, I would like to think we should all be excited.  As an entrepreneur I have to be optimistic and say things are going to be looking up.  2009 is behind us, some of the larger banks have pledged billions of dollars in business lending, the government is going to extend their recovery program till the end of February, and according to the Federal Reserve, demand for small business loans is up.  Regarding the SBA and government money, the SBA came out with a press release this week expressing to the small business community that President Obama signed a bill yesterday that included $125 Million to the SBA and should support up to about $4.5 Billion in business loans until the end of February. 

These funds are going to be allocated to raising the guarantee on the two main government programs, the 7(a) loan program and the 504 commercial loan program.  The funds will also be used for lowering the fees the borrowers have to pay the banks.  Since the recovery act, there has been $16.5 billion put into the hands of small businesses and has attracted over 1,200 banks to return to the SBA lending programs.  Thats not bad considering banks were falling off the map daily about one year ago.  As far as non government loans, I thinks banks have to start lending to make any money.  Not only did the Federal Reserve say demand for business loans was going up but that criteria’s from tha banks are coming down.  One of the largest sectors that I have seen today as far as business lending is the private money sector.  You have all of these independently wealthy individuals or organisations that are saying to themselves, if the banks aren’t going to lend to small businesses, then I’m going to. 

These small private guys are making a killing right now in small loans to good quality businesses.  If you turn on the radio, or the T.V, or look in any paper, the entire country is talking about access to capital for small businesses.  One great thing about our country is if you say the recession is over enough times, people are going to start believing it.

Secured loans are now becoming more popular among all homeowners and other peoples who want to make some bigger expenses. Definitely on making a big expense you will always need some type of loan.

Secured loans will be the best choice for you at that point because they can be taken on any amount and their approval time is very fast. You can get a secured loan as quick as in two week time.

The best thing about secured loans is that their criteria are their low interest rate and long repayment terms. You can repay them on a long time.

If the borrower is ready to place collateral, then secured personal loans are the best option for the borrower. It fulfils the entire criterion that the borrower seeks in a loan.

Personal loans can be borrowed for any personal purpose such as debt consolidation, home improvement, education expense, car finance etc.

The rate of interest of a personal loan is very low as compared to other types of loans. This makes it a better choice for personal borrowers. If borrower can repay all the payments on exact time limit then there is no risk or threat to the security and your asset.

Another good point for secured personal loans is that, bad credit borrowers can also apply for a personal loan but they will get just a little bit higher interest rate due to bad credit. But a good research can be helpful to find low interest rate for bad creditors.

The Problem

The only problem for secured loans is that, if you cant repay your payments within your repayment time then youll get a risk to lose your asset. Because all secured loans are required to place the asset as a security. And loan provider may have the right to take your asset if you cant repay them. So you should always be careful while applying for a secured loan. Only apply if you think you can make your repayments within your repayment time.

Knowledge about basic currency trading concepts and terminology is vital. In the forex market, there are two pricing terms, “bid” and “ask”. If the price of one currency pair, for example, EUR/USD, is 1.5161/64 then 1.5161 is the bid price, the lower number; a person willing to buy the Euro is offering this amount. The second number, 1.5164, is what the holder of the Euro is asking.

Another term commonly used in the currency market is “PIP”, or price interest point. A PIP is the incremental move of one currency against another. If the bidder in the previous example increased his bid to 1.1564, it would represent a four PIP move.

Another frequently encountered forex trading term is “price quote”. A quote represents the pricing that the world market offers for a given currency pair at that moment. Due to the global, liquid nature of the forex, quotes change from one instant to the next.

For the new investor, a forex trading course is an excellent learning tool, and it should cover as many aspects of online currency trading as possible. Key items such as leveraging, margins, and types of orders are essential inclusions. The course should also cover basic terminology, software usage, and analysis methods. Analysis is one of the keys to successful online currency trading, and a new trader is wise to learn both fundamental and technical analysis and their tools.

Venturing into a new world of online currency trading can be nerve-racking; a smart investor’s first step is to sign up with a reputable forex broker. Before any commitment of funds, it is advisable to investigate a broker’s credentials, policies, reputation and business standing.

The dynamic financial market place that is now within easy reach of the average investor provides an astounding opportunity. With the right knowledge and tools, success in the exciting arena of online currency trading is possible through an individual’s diligent investment of both funds and effort.