Five ways to cut your food bill by 35pc

Some simple tactics to help you get the best value for your money at the checkout.

If your food shopping bill seems to go up every week, it’s not because you’ve got increasingly expensive tastes. According to the British Retail Consortium, the price of food is increasing four times faster than the price of other items.

Prices last month were 4.4pc up on October 2009, the highest annual increase since June last year. For a family that spends £100 a week on groceries, the increase would be the equivalent to adding £230 to their annual shopping bill.

The problem is only going to get worse, with Mervyn King, the Bank of England Governor, warning that living costs will continue to soar – giving all of us a shock at the checkout.

By Rosie Murray-West, Telegraph.co.uk

Debt Settlement: An Effective Way To Get Rid Of Financial Obligations

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Debt Settlement: An Effective Way To Get Rid Of Financial Obligations

After the liquidity crunch and recession of 2007, price of daily commodities have soared up. As a result, many consumers are becoming defaulters and are forced to opt for bankruptcy. To avoid such situation, various debt settlement companies have extended their helping hands to lower the outstanding credit balance. Recently, the Federal Trade Commission has passed a new law. As per the new law, no settlement company can collect upfront fees from the clients, until their debt gets actually settled. Thus, the new laws make the settlement process much more legitimate.

Debt Settlement – What it is

A debt settlement is a program, which can lower the outstanding credit card balance of an individual. For doing this, the person has to enroll in a debt relief company. The representative of the company will contact and negotiate with the creditors, on his behalf. After negotiation, the outstanding debt may get reduced by 40% to 60%. However, he needs to pay taxes to the IRS, for the forgiven portion of the debt, if it exceeds $600.

A fixed amount every month has to be deposited with the settlement company every month. When the amount will build up into a lump sum, the company will pay the creditors. However, not all people will be qualified for a debt settlement program.

Eligibility criteria

The eligibility criteria for a settlement program are as follows:

* The outstanding debt balance should be at least $10,000

* The consumer should have exceeded the limit on his credit cards

* The person cannot afford to make more than the minimum monthly payment

Benefits of the program

Some advantages of debt settlement program are as follows-

* Lower monthly payments: Once a person opts for this program, he does not have to make monthly payments to his creditors. He has to make direct payments to the settlement company. The payment amount per month also becomes lower.

* Reduction of outstanding balance: Once a person opts for this program, his outstanding debt balance gets reduced by 40%-60%. However, the forgiven amount will vary from one lender to another.

* Probable end of collection calls: The creditors may stop making harassing calls or taking any legal action against the person, once he opts for settlement.

If you are looking for a reliable debt settlement company, log onto Superiordebtrelief.com. Their professional and ethical assistance will help you strike a good negotiation with the creditors. Taking their help, within a short time you can be a financially free man.

Should New Financial Regulations Extend to Payday Loans?

Today’s guest feature is a short overview of payday loans and the upcoming financial overhoaul. Not as big a part of the economy as investment banking, the loans are what a growing number of Americans have to turn to patch their budgets.

Should New Financial Regulations Extend to Payday Loans?

Payday loans are already heavily regulated to strict standards, but new financial regulations may try to add more. Granted, a cash advance is not the same thing as credit default swap or a predatory mortgage, and many payday lenders feel new regulations aren’t merited, unlike the other industries that caused the collapse. The 2008 panic had nothing to do with payday lending, and they argue, that should these loans be too regulated they might disappear, leaving low-income, high credit risk borrowers, with few other options.

Bad Credit Loans

There are many cash-strapped borrowers right now, who have damaged their credit scores and have no chance of getting even a short-term loan from a conventional lender. Yet, as long as they continued to be gainfully employed, even if they have no assets, they can still secure a payday advance. Payday loans still offer the opportunity for emergency cash borrowing, as they don’t check a credit score. All their customers need is a decent job that will allow them to repay the loan in the next paycheck cycle. When a sudden unforeseen emergency hits, it’s a good way to cover the shortfall in cash.

Used Responsibly You Can Rebuild Your Credit

One of the little known secrets of payday lending is that many people who have suffered a bankruptcy or a foreclosure find them an ideal way to borrow money and rebuild their credit scores. When the loan is repaid on time it becomes a positive entry in the payment history, and can eventually over time help to rebuild a tattered credit history. However, if these loans are regulated out of existence, there is little other no credit type loans that will do the same. Even if you use a pawnshop to get a short-term loan, an asset secures the loan, and therefore there is no entry made in your credit history upon repayment.

Payday loans and travel disruption

In this week’s Your Money Dominic Laurie looks at the problems surrounding payday loans and the battle to get compensation for travel disruption.

watch the video here:

http://www.bbc.co.uk/news/business-10975659

Payday loans quadruple as 1.2m borrow in short-term

Cash-strapped employees borrowed £1.2bn in 2009, paying interest rates of up to 2,000%

The number of people taking out costly payday loans has quadrupled to 1.2 million over four years, says a report by Consumer Focus. It estimates that employees borrowed £1.2bn in 2009 alone.

Interest charges usually range from 13% to 18% but can be as high as 30% for a month-long loan from some online providers, generating APRs of 1,000% to 2,000% because of the short-term nature of the loans. When borrowers cannot afford to pay off the loan the following month charges can balloon.

Stephanie Derby took out a payday loan for £400 18 months ago. “I was working as a teaching assistant and not earning much money,” she said. “I was behind on payments and needed cash quickly, so a payday loan was the last resort for me.”

Getting the money was easy. Derby took a few payslips into a branch of her payday loan provider to prove her income, and they paid out straight away. But paying back the loan was a different matter. “It took me about a year, by which time the amount had doubled. I had to pay cheques to renew the loan – it was frustrating and embarrassing. I just wanted to pay the money back but I was stuck. I would never do it again, even if I was desperate. The trouble was I didn’t talk to anyone about my debt problems at the time.”

In its study – Keeping the Plates Spinning – Consumer Focus warns that banks need to offer affordable short-term loans, and recommends stronger safeguards to protect consumers.

Its research indicates that payday loan borrowers take out an average of 3.5 loans a year, with an average value of £294. Two-thirds of payday loan borrowers have a household income of less than £25,000. They tend to be young and single.

Consumer Focus stops short of recommending a ban on payday loans. Marie Burton, its financial services specialist, said: “These products are controversial, but we don’t agree with calls for them to be banned. Outlawing payday loans could leave some borrowers vulnerable to illegal loan sharks. Instead we need sensible safeguards to stop borrowers becoming dependent on this high-cost credit.”

Jill Insley, The Guardian

Call for safeguards on ‘payday loans’

Consumers are increasingly turning to expensive “payday loans” from specialist lenders, as high street banks refuse to loosen their grip on credit.

According to research by a consumer watchdog, people who are unable to get a bank loan are now turning to short-term lenders such as The Money Shop and PaydayUK that offer to check credit ratings and approve loans within minutes.

More than a million people in the UK have taken out a payday loan, borrowing £1.2bn in total, according to a report by Consumer Focus published on Saturday.

The market grew by more than 40 per cent last year, while nearly twice as many people took out a payday loan in 2008 as in the previous year. The watchdog said that the market could grow by a further 45 per cent.

Payday loan companies from the US have flooded the UK market in recent years, with advertisements on daytime television and a strong presence online. The companies target people who have unexpected bills, rather than offering long-term solutions to debt.

The Money Shop, the UK trading name of Dollar Financial Corp in the US, which has the largest UK market share, asks on its website: “Need extra cash for life’s little emergencies?”

Borrowers typically pay a set charge of £13-£18 for every £100 borrowed.

The loans are only offered to people with bank accounts and jobs, so are not viewed as a subprime phenomenon, although they tend to be aimed at people on lower incomes. Consumer Focus estimates that two-thirds of loans are taken out by people on salaries of less than £25,000.

Tim Moss, head of loans at Moneysupermarket.com, says many people who take out payday loans are professionals who have “stretched themselves in the times of easy credit”.

“It’s not for people that have never been able to get credit,” he said.

Some people are even turning to the loans to improve their credit rating, as the companies can pass on details of repaid loans to credit reference agencies. The charges on payday loans can also be cheaper than an unauthorised overdraft from a bank.

Consumer Focus has stopped short of following the path taken in some states in the US and recommending that payday loans be outlawed, warning that a ban could push people into using illegal loan sharks.

Instead, it has called for safeguards to be introduced to stop people becoming reliant on the loans, such as only allowing households five payday loans a year. The watchdog also believes that there is a gap in the market for short-term loans that high-street banks might be able to exploit.

By Alice Ross, ft.com

Doorstep and payday loan lenders escape interest rate cap

Capping interest rates and charges imposed by doorstep and payday loan lenders would further reduce competition in the sector, says Office of Fair Trading.

The Office of Fair Trading (OFT) has concluded there is no need to cap the interest rates and other charges levied by high-cost credit providers such as doorstep and payday loan lenders.

At the end of a year-long review into a sector that typically targets those on low incomes who cannot access mainstream credit the OFT said that, while it recognised competition between suppliers was less effective than it might be, overall such lending markets worked “reasonably well”.

The review looked at pawnbroking, payday loans, home credit and the rent-to-buy market.

One of the more recent entrants to the high-cost credit market – payday loans – has come under fierce criticism from campaign groups and MPs. Some charge interest rates in excess of 2,000%, a factor that prompted the Archbishop of Canterbury, Rowan Williams, to call for “an urgent review” of such rates two years ago. At that time, Debt On Our Doorstep, a coalition of debt charities and credit unions, tabled a motion in parliament calling for an investigation into payday loans.

The OFT said today that it had considered the case for price controls for pawnbroking, payday loans, home credit and rent-to-buy credit and concluded they would not address the problems in the sector. It said such controls could further reduce competition in the sector and lead lenders to recover lost income through increasing charges for late payment and default.

It said, instead, that it was recommending improvements to the way the markets operate, including an industry-wide code of practice and more information about such loans to be published on price comparison websites. Some of these, such as Moneysupermarket.com, actually sell payday loans.

Ray Watson, OFT director of corporate services credit, said: “Our report has found that people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal.

“This means competition between suppliers is less effective than it might be. The recommendations we are making would deliver worthwhile improvements to these markets but more radical approaches, outside the remit of the OFT, need to be examined by the government if the fundamental and long-standing issues of lack of consumer power and limited supply are to be tackled.”

Mick McAteer, founder and director of the Financial Inclusion Centre, said he was “deeply disappointed” by the OFT’s findings. “There is no justification for a failure to impose price controls in this sector,” he said. “We were hoping to see a cap on charges phased in over three years while social lenders build up their capacity to offer alternative forms of finance.”

Social lenders include businesses such as Fair Finance, which offers financial products and services to the financially excluded in London, and credit unions.

The Finance & Leasing Association, the trade association for the asset, consumer and motor finance sectors in the UK, said it agreed with the OFT’s findings on price controls. Head of consumer finance, Fiona Hoyle, said: “They would have adverse unintended consequences for consumers, including for the cost and availability of credit.

“We hope that the government will take careful note of these arguments against price capping when it considers the credit and store card markets.”

Commenting on the report, independent consumer body Consumer Focus said that “simply clamping down on high cost lenders will not provide the answer”.

“The OFT’s report shows that it would be very hard to boost competition among high-cost lenders and drive a better deal for consumers,” said Marie Burton, financial services specialist at Consumer Focus. “It is therefore important that the government considers how it can make sure that lower-cost borrowing, like credit unions, is available to borrowers on low incomes.”

A report this week revealed up to 67,000, or 7%, of those struggling with debts say they have already contacted a loan shark or doorstep lender, while a further 13% have considered doing so.

Steven Law, president of R3, the trade body for insolvency professionals that commissioned the research, said: “Going to this source for financial resolution will simply build up a larger store of debt and create more pressure and stress.”

guardian.co.uk

Pro and con: ballot measure to cap payday loans

known simply as I-164 – would cap interest rates on payday and title loans, and advocates and opponents of the measure have been trying to drum up support across Montana in the months leading up to Tuesday’s election. Here’s a look at two of the people on opposite sides of the issue.

Stacey Faldetta is exactly the type of person organizers of the I-164 measure say they are trying to protect by imposting a 36% interest rate cap on payday and title loans.

A few years ago the single mother found herself between jobs and in need of cash, so so she took out a title loan.

When she missed a couple of payments, she says the lenders began hounding her, her relatives, and her friends.

She wound up up paying over $600 on a $300 loan that was still nowhere near paid off.

So, she decided to give up her $3,000 car to finally get rid of the loan she took out to help pay for it in the first place.

Stacey supports the initiative because she says she feels the payday loan system is predatory and takes advantage of those who don’t have a lot of money to begin with.

While the initiative could help protect some people from getting sucked in to a cycle of debt, others say it could put payday loan stores out of business, forcing the people who rely on them to look for other means for financial help.

Vietnam veteran Mike Dutchak can’t work because of multiple disabilities, including an enlarged heart, diabetes, and degenerative arthritis.

He gets about $2,000 each month in Social Security funds which is almost the exact amount needed to pay his monthly bills. If there’s an unexpected expense, he’s out of luck.

So, in order to have a little cushion every month, Mike takes out a payday loan of $200 which he pays off, with interest, the next month.

Mike’s not only worried about his personal finances if the initiative passes; he says he’s also concerned for the loan center employees who could lose their jobs.

Organizers say more than a 1,000 Montanans have endorsed the measure, but similar attempts to put a cap on interest rates have failed in the 2003, 2005, 2007 and 2009 legislative sessions.

by Kay Rossi (Great Falls)

More than one million people ‘take out payday loans’

Making money last until the next pay day is an old problem, but now there are plenty of new lenders offering the solution of a payday loan.

The number of people taking one out has quadrupled since 1996 according to the watchdog Consumer Focus.

That is despite some companies charging interest rates of more than 2,500% a year.

The organisation is now calling on the industry to bring in more safeguards to protect vulnerable borrowers.

”Payday loans are a valid form of credit and it’s much better for people to take one out rather than go to a loan shark,” said Sarah Brooks, head of financial services at Consumer Focus.

“But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over.”

‘Mounting up’

Research by Consumer Focus suggests that 1.2 million people are now taking out a payday loan every year, borrowing a total of £1.2bn.

For many people such a loan is a quick and efficient way of getting hold of short-term credit.

If the money is paid back promptly on the next pay day, this type of lending can be cheaper than paying an unauthorised overdraft or a credit card charge.

However, if the loans are rolled over, debts can quickly escalate.

Dressmaker Stephanie Derby from Finsbury Park in London took out a pay day loan after she fell behind on rent and bill payments.

She was already overdrawn and at her limit on her credit cards.

”I didn’t feel I had any other option, I had just graduated and all my debts were mounting up, it really was a last resort,” she said.

“I borrowed £400 hoping to pay it back a few weeks later but I was unable to.

“Each month it cost another £56 to renew the loan and after six months the initial loan of £400 ended up costing me nearly £800,” she explained.

Problems

However, the pay day loan industry says when managed properly, many people find this type of lending easy to understand and less risky.

”There is a reluctance among many consumers to take on long term loans from traditional lenders, because they feel their financial situation could change,” said John Lamidy from the Consumer Finance Association.

“But they find that the short term credit offered by the pay day loans industry does meet their needs.

”We are working with Consumer Focus to find out how serious the problems they identify are and whether they affect lots of people or just a few,” he added.

The association is also working with the Consumer Credit Counselling Service (CCCS) to find out how to help borrowers who fall into problems.

The money education charity Credit Action says traditional banks could do more to provide the short term credit people need.

”Banks could offer that kind of money to people by extending their overdrafts for a little bit longer for example,” said Chris Tapp, director of Credit Action.

“Banks can afford to do that and they are still making millions of pounds of profits so they could do more for their most vulnerable customers.”

No alternative?

The British Bankers’ Association (BBA) claims its members are already being as flexible as they can.

”They have to make a risk assessment on every lending proposal they receive and quite frankly it does not do any good to lend money out to people if they can’t afford to repay it,” said Brian Capon from the BBA.

Stephanie Derby’s dressmaking business is now taking off and she has repaid the loan.

She says she will never take one out again.

But for many other people a payday loan is still the only legal option for short term lending, when money is tight and there is nowhere else to turn.

By Susannah Streeter, BBC News

CREDIT CARD DEBT BAILOUTS – HOW OBAMA’S DEBT RELIEF GRANTS IS HELPING CONSUMERS ELIMINATE DEBT

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When numerous American households suffer severe economic depression, the rescue call approaches in the form of Obama’s debt relief grants. A financially weak economy needs enough inflow of cash to recoup to its original form. Not only are the consumers who have taken loan in crisis, but also those who are entitled to receive the amount. In order to strike this balance, federal Government has declared various policies, also aimed at helping people eliminate their debt.

 When businesses slowed down and economy was almost sinking, Government pumped in stimulus funds enabling Finance institutions survive even in a deeper crisis. This money also encouraged debtors to settle their dues for a lesser price. A smart negotiation, with the help of a Debt settlement company, allows a debtor to pay only half of the actual loan amount. Along with stimulus surplus, Government has also given several tax-breaks targeting debt settlement and some investment incentives.

Any Government initiative is aimed at the overall growth of the economy. This treatment shall work provided it reaches everyone in need. There have been several fake companies trying to make some money but each individual’s responsibility is to seek help from the right source. Debt relief network has a list of legitimate debt relief companies working in the given jurisdiction. Also make sure that these firms are acknowledged by the Better Business Bureau (BBB) and own membership with The Association of Settlement Companies (TASC).

Grants and financial aid is available to the weaker sections of the society, after a reasonable scrutiny. People, having incurred huge debt, due to overwhelming credit card bills, have debt relief solutions, aided by these grants. Unsecured debt beyond ten thousand dollars is the prescribed limit to consider debt settlement. This repayment program takes 3 to 4 years time after which credit rating shall improve gradually.

Debt settlement program, a Government initiative, definitely is a bailout solution for all those who are possibly looking out for an attorney to file for their bankruptcy. Make sure you seek out a smarter solution without losing your reputation and career.

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