A report by Consumer Focus suggests that the number of people taking out payday loans has increased from 300,000 to 1.2 million in the last four years, with the amount of borrowing totalling £1.2 billion in 2009. The recession had sparked significant growth in the demand for short term loans as consumers were being squeezed financially from every angle and the number of other, more traditional unsecured loans reduced.

Increasing interest rates

Payday loans are designed to help individuals, especially those with bad credit, cover unexpected costs at short notice, until they next get paid. However, due to the risks associated with a relaxed attitude towards lending and lending small amounts, the interest rates on payday loans are very high. In fact, the ‘Keeping the plates spinning’ report by Consumer Focus suggests that the average interest rate per £100 of loan rose from 15% to 20% in 2009, something with which the Consumer Finance Association (CFA) agrees:

“A payday loan will typically range in price between £9.95 and £30 for each £100 borrowed over a 30 day period, depending on the lender,” said the CFA in its ‘Payday Lending Report’.

The Trade Body for Insolvency Professionals, R3, found that more than 2 million people have taken out a short term or payday loan in the last year alone. Based on a typical 30-day loan period and the average loan amount of £294, each individual person would pay £58.50 in interest charges.

However, should the borrower default and allow the loan to roll over for six months, they could end up paying back more than double the amount of the original loan (£645*).

The payday loan market has seen a spurt in the number of online loan providers over recent years so going online has since become the most popular way to obtain a payday loan. Consumer Focus has blamed the significant rises in the interest rates on short term borrowing on this increase in the online segment of the industry.

However in response to the claim that the uptake of payday loans is growing and that online providers are to blame, John Lamidey, CEO of the CFA, said: “There has been a growth in advertising [of payday loans] so people generally are more aware of payday loans, but that is not the same as actual growth.

“Note also that it was not until 1 January 2005 that it became legal to contract a credit contract online. Before then, there were no online payday loans, so inevitably there has been growth from scratch in that part of the market,” he added.

Preparation is key

At some point in our lives we all face unexpected costs, such as the car breaking down or a huge electricity bill. But in order to avoid having to take out expensive emergency payday loans, consumers need to be on top of their finances. While some consumers may turn to standard credit cards to help them out with unexpected costs, some consumers have to resort to taking out payday loans because they are under the impression that they are unable to obtain credit elsewhere. However, this can be done with a little shopping around.

Savings are of course the best way to pay for any unexpected bills because there is no chance that it will lead to bad debt and it won’t cost you a penny (in interest).

By putting away a small amount of cash each month you could build up a sizeable savings pot, which will come in handy when those big winter bills, or other unexpected costs, come rolling in because you can just pay for them in cash. Although this sounds great, it is often not feasible for people on a very tight budget.

Credit cards are another great way to avoid the higher costs of a payday loan, without having to use savings. Credit cards are even a viable option if you have a poor credit history because there are cards on the market for people with bad credit.

Consumers should keep a ‘spare’ credit card and not use it unless in desperate need of extra cash. Then, when payday finally comes around, simple pay off the outstanding balance, just as you would with a payday loan but without the huge costs. Most credit cards come with 56-days interest free credit (from the date of purchase and doesn’t apply if you withdraw cash) so you shouldn’t incur any interest charges if you pay your balance off in full and on time each month.

Credit building credit cards

Credit building credit cards (aka cards for bad credit) allow you to access credit while, at the same time, rebuilding your credit history. These cards come with relatively low credit limits and much higher interest rates than standard UK credit cards but they are still far cheaper than payday loans.

If you were to take one of the top credit cards for bad credit which, for example, offers a representative APR of 35.9% and didn’t have the 56-day interest free period, you could borrow £294 for the same 30 day period and only pay £8.80 in interest – a whole £50 cheaper than the average payday loan! If it did have the 56-day grace period, you wouldn’t pay a penny for borrowing £294 over 30 days.

Are payday loans worth it?

If you are fully prepared, you can avoid the costs of payday loans. However, one of the reasons for their rising popularity is the appeal of ‘instant cash’. Many payday loan providers offer the ability to have the money in your bank account within the day – some within minutes. If you need cash quickly then a payday loan could be your answer, but it is always better to prepare for emergencies and have alternative sources of credit available to you.

[More]

Before anyone can set off from their home town and into fresher’s week, there is some important business every student needs to take care of – opening a student bank account. Some of the major benefits of student bank accounts are the great deals and rates that are usually on offer – but most importantly the interest free overdraft.

More often than not, the thing that defines a student bank account from any other high street current account is the interest free overdraft. The student market is a highly competitive one for banks so students will have offers thrown at them from left, right and centre. It is essential that students do not get side-tracked by the goodies on offer such as free cinema tickets and stay focused on obtaining that vital interest-free overdraft.

Opening a student bank account

The first thing to be aware of when looking for student bank accounts is that you are only allowed one student account from any bank. When applying for an account, students will need to provide proof of a university placement for the upcoming year and agree to have their student loans paid into that account.

Interest free overdraft

This is the staple of any student bank account and should be used wisely. Standard current accounts do offer arranged overdrafts but users have to pay a small fortune to go into the red with some banks charging £1 a day for doing so. Most student banks accounts have this free overdraft facility as standard, with the credit limit reaching up to around £3,000 for the final year of a three-year degree. It’s also important to note that banks often use “up to” in their advertising campaigns, meaning that they might carry out a credit check and offer you a lower overdraft limit.

Interest free overdrafts allow you to borrow money very cheaply but it is important to remain aware that you will be required to pay back the overdraft after completing your course, often within 12-24 months (most student accounts turn into graduate accounts after graduation and the overdraft amount drops incrementally year-on-year). If you are unable to get your account into the reduced overdraft limit in the time given, you could end up paying a lot of interest on a large overdraft.

Charges

As a student, you have a wealth of financial options open to you but the banks generosity has to end somewhere, and that somewhere is often bank charges. If you go into an unarranged overdraft, have a direct debit rejected or insufficient funds for a payment, you will more than likely be charged. This is the same as with all standard current accounts, and these charges could be up to £35 a time so it is vital that you are fully aware of them and avoid getting yourself into that situation.

Branch location

If you are at a campus university, you could be a long way away from a large town or city, meaning that if there isn’t a branch on campus you might struggle to get to get to one. Before selecting a student account, check their branch locator to find if there is a branch on your university campus or anywhere nearby.

Customer service

It’s very easy to get carried away with all the great things the banks are throwing in your direction, but students need to remember that they are still customers. Once the initial period is over and you are dealing with the bank on a day-to-day basis, you will want to be treated properly and speak to someone who can help you. Check out reviews of the local branches and find out if the bank you are interested in is highly recommended for students.

Compare bank accounts

Most student bank accounts do offer an interest free overdraft facility. While this is the most important thing to get your hands on before you start University, there could be other offers available and better rates on the table. Before deciding which account to go for, ensure that you thoroughly compare bank accounts using online tools and tables. Some other things you might want to consider when you compare bank accounts are any monthly or annual fees, overdraft limits and the savings interest rate.

[More]

Fixed rate savings accounts offer consumers a fixed rate of interest on the money deposited into the account for a set amount of time. The catch is that you won’t be able to access that money for the same period, without incurring a huge drop in the amount of interest you were due to earn or another penalty. These savings accounts differ from standard accounts because they provide fixed rates rather than variable interest rates (where the rates fluctuate depending on the Bank of England base rate).

There are a couple of risks involved in locking cash away for a long period of time, so only those who are incredibly comfortable with the idea should consider applying for a fixed rate savings account. Tying your cash up is a problem in terms of access but it does mean that you are able to snag yourself some great interest rates.

Access

As we mentioned, in return for the higher interest rates you have to stick to your side of the bargain and lock your money away. There are varying different term lengths for fixed rates but the minimum is likely to be one year. Before you open a fixed rate savings account it is so important to really consider whether you will need access to that money quickly – what would you do in an emergency? Do you have a back-up source of income?

Term

The longer you fix for, the higher the risk associated with fixed rate savings accounts. Although with a fixed rate you will not suffer from dips in the interest rate, you will also not benefit from peaks. The unpredictable base rate could suddenly increase but you would not be able to get out and deposit your money with a higher paying provider.

Fixed rate savings accounts often provide terms from 6 months up to 5 years so you could always opt for a fixed rate saver with a shorter term – this would offer you more flexibility while still allowing you to benefit from the high interest rate on offer.

Interest

Fixed rate savings accounts don’t usually pay monthly interest, unlike variable savings accounts, so some people avoid fixing. However, there is a way to work around this annual interest payment. If you have a lump sum, consider how much you would like to earn in interest, and then see if there is a way to earn the same amount on a smaller sum.

For example, if you have £200,000, you could invest £190,000 in a fixed rate account paying 5%, and put the remaining £10,000 in an instant access variable rate account. You could use the £10,000 to supplement your income, and when you get the 5% interest payment from the fixed rate account you could use it to make up for your spending from the instant access account.

This is one way for people who rely on using interest earnings to supplement their income to benefit from fixed rate savings. However, the downside comes if you need to invest your whole lump sum to gain the interest required, so, in this case, the above method would not work for you.

Alternatives

If you currently use a standard variable savings account you can still get great interest rates, but it takes a lot more work. As the Bank of England base rate varies, so will your interest rate. This means you will need to constantly monitor your interest rate and compare savings accounts to ensure you are getting the best rate available on the market.

If you are looking for guaranteed good rates, something that a variable savings account cannot offer, you might want to consider an index-linked savings bond.

As with fixed rate savings accounts, you need to lock your money away in order to achieve the good rate. However, with an index-linked savings bond you are paid the percentage change in inflation which means that your cash is no longer shrinking in real terms due to inflation, thus increasing your spending power. Some of these accounts are tax-free but generally you will be taxed.

Another way to guarantee a good interest rate is to get a base rate tracker account. While these accounts require you to tie up your money, they do offer you the peace of mind that your interest rate will be above the Bank of England base rate.

At the moment the base rate is still at its historic low of 0.5%, so it is incredibly unlikely that it would fall further and you could be missing out on a higher rate. However, if the base rate were to increase in the future a base rate tracker could prove to be a suitable alternative to a fixed-rate account.

Applying

Before you apply it is essential that you compare savings accounts and find an account that is able to meet your personal requirements. Online comparison tools and tables should be able to help you compare savings accounts so you can find the best interest rates and other features.

Once you have chosen an account, you need to be very careful when applying to ensure that you are getting the rate that was advertised. Most of the time this won’t be a problem, but there is always the possibility that the bank will cut the interest rate at some point and try to offer you a fixed rate savings account with a lower rate. Before you tie up any cash in the account, double-check the interest rate.

[More]

All of the ‘big six’ energy companies have now hiked their prices in time for winter, and for the second time this year, leaving British consumers even harder pushed in a difficult economic climate.

These huge increases in prices have left people wondering why the suppliers are allowed to hike their prices when the cost of wholesale gas and electric is actually falling. The anger from consumers around the UK has sparked an independent inquiry from industry regulator Ofgem and calls for the case to be referred to the Competition Commission.

Rising domestic energy prices

Now that all of the big six suppliers have increased their prices consumers can decide whether to fix or switch their tariff in order to cut gas and electric costs.  Details for each of the company’s price increases are below:

Scottish Power: 19% for gas and 10% for electricity to take effect from 1st August 2011

British/Scottish Gas: gas will increase by 18% and electricity 16% with effect from 18th August 2011

Scottish & Southern Energy: electricity prices increase by 11% and gas prices by 18% from 14th September

E.ON: price rise of 18.1% on gas and 11.4% on electricity to take effect from 13th September 2011

nPower: price rises of 15.7% gas and 7.2% electricity won’t take place until 1st October 2011

EDF: Electricity price rises of 4.5% (in line with inflation) and gas price increase of 15.4% to come into effect from 10th November 2011

The final provider to jump on the bandwagon was EDF Energy earlier in the year but their hikes didn’t come into force until March 2011 as they had a large scale marketing campaign for fixed prices. EDF held off on increasing their prices until 15th September 2011 – at the time, before it announced its price increase, analysts predicted that they were simply holding off, taking advantage of customers who were switching providers.

Wholesale energy prices

Every one of the energy companies has blamed their price hikes on the rising cost of wholesale gas and electricity and the natural disaster in Japan. The uproar around the massive price hikes has come from the fact that wholesale gas and electricity prices have been falling.

Last month The Daily Telegraph reported that electricity prices on the open market were at their lowest point for the year, £45.2 per megawatt-hour, and day-ahead gas was at the lowest price since early November 2010 – 49.9p per therm.

What is being done?

The demand for answers about the price hikes has sparked an investigation by Ofgem. The regulator has asked the companies to explain how they have reached their profit estimates, and how they have calculated the price increases being passed on to customers.

Alison Wright, a spokeswoman for Ofgem, stated that: “Ofgem’s role is to protect consumers by making sure the market works effectively.  Last year, we launched a wide ranging review of the retail market and concluded that energy companies are failing consumers by stifling competition by a combination of tariff complexity, poor supplier behaviour and a lack of transparency.

“We are pressing ahead with reforms that include sweeping away complex tariffs in order to expose energy suppliers’ prices to consumer power. Ofgem has also appointed accountancy firm BDO to provide recommendations on how best to improve accounting disclosures by energy suppliers,” Ms Wright continued.

Is Ofgem failing British consumers?

The regulator has been under increasing pressure from consumers after it was revealed that the wholesale costs were falling while profits were increasing. The British public are demanding for more to be done about the situation as government cuts and increased inflation is making it a difficult time to live in.

Mark Todd, spokesman for Energyhelpline.com, said that the reason the regulator has been so relaxed about the price hikes and profits so far is because “the UK regulators believe in the free market and thus support it”.

He said: “You are therefore unlikely to see them criticising price rises for this reason as they see it as the necessary response to increasing cost pressures on the suppliers. Also if they criticise too much they would be really criticising themselves as they are the architects of the UK energy market.”

Save money on energy bills

Mr Todd went on to say that consumers have a free choice and should be trying to find ways to save money on energy bills and cut gas and electric costs:

Mr Todd said: “As a customer the key thing to remember is that a free market means that, as well as the suppliers being free to choose the price they charge you, you have the power to withdraw your custom and get a cheaper deal. This is the best way to fight back against price rises; in a word, switch.”

If you are considering switching supplier it is absolutely essential that you compare gas and electric to ensure you are going to save money on energy bills.

With the ‘big six’ increasing prices, comparing the entire market is the only way to cut gas and electric costs. Once you have found a cheaper supplier, consider signing up to a fixed tariff in order to prevent being affected by any further price increases in the next couple of years

[More]

Post Author: Marghaid Howie, Gas and Electric Reporter

EDF finally became the sixth major supplier to announce a price rise last week, just days after E.ON & the Scottish & Southern Energy group implemented their previously announced price increases. These higher rates will add around £200 to the typical annual bill.

However, there is some good news for UK households, as Scottish Power launched two cheap tariffs and the bargain EDF fixed deals hold on for another week.

The Online Energy Saver 15 tariff from Scottish Power is the second cheapest deal on the market, and one of only two available tariffs remaining at under £1,000 per year on average. Compared with the typical bill of £1,300 after these price rises, these cheap online tariffs could save you hundreds.

Scottish Power Online Fixed Price Energy Dec 2012 is actually cheaper than its previous fixed tariff at an average of just £1,015 a year, and fixes your bills until 30th November next year.

Meanwhile, E.ON has just withdrawn the cheapest tariff from the market, its Save Online v9. It is replaced with a new, more expensive version, pushing it down the league table on average. However, Save Online v10 remains one of the cheapest tariffs in certain UK regions, reinforcing the need for customers to compare gas and electric deals in their area rather than relying on averages.

[More]

Your credit limit is the amount of borrowed money you have to spend on a credit card; this amount is set by the card provider when your application is granted. The credit card company will usually have a minimum and maximum credit limit, but your limit will be decided based on your credit score. Your first credit limit is often a provisional limit which may be increased in the future.

Setting credit limits

When you apply for credit the lender will score you from its own scoring sheet, as each lender will have different requirements from its customers. This means that if one company provides you with a small credit limit, another may offer you a much larger one, and does not necessarily mean that you have a bad credit rating.

Credit card companies will consider many factors when setting your credit limit. These include your other outstanding debts on credit cards, your payment history and the amount of credit you currently have available to you. Since the credit crunch hit, it has been much harder for customers to increase their credit limits or get offered high initial credit limits as the government are pressing for companies to lend responsibly.

Provisional credit limit

Most of the time lenders will set new customers a provisional credit limit until they are satisfied that the borrower is responsible enough to manage a higher limit. If you use your credit card wisely in the first three to six months, you might find that you are offered a much higher credit limit without asking – this is known as an unsolicited (i.e. you didn’t ask for it) credit limit increase and is something that the government are trying to prevent.

There are no credit card regulations around credit limits, although the UK Cards Association published best practice guidelines for credit card limit increases in January 2011, which said:

“The guidelines are built around what are known as ‘low and grow’ policies. This means customers may be granted a small initial credit limit and, if the card is used responsibly and other data indicates that the cardholder would be able to manage a higher limit, it may be increased incrementally. This encourages responsible borrowing and allows cardholders to manage their credit.”

It is very unlikely that you will be able increase your credit limit during this initial period unless you have plans to decrease your limit on a different card in order to use another. Plus, even if you do reduce your credit limit on a different card (which, once changed, won’t be able to be changed again for 6 months), it will be up to the card provider’s discretion when it comes to the final decision.

Grant Bather, a spokesperson from Virgin Money said that if customers have “applied for another card with MBNA or Virgin, we can reprioritise their lines between cards”.

“Customers would need to contact us to request this and we’d help them through this process.

He continued: “If the second card they hold is with another lender and they have reduced their credit limit, then we would need some information to consider the customers’ request in order for us to accurately assess their stability, ability and willingness to pay a higher credit line with us.”

Mr Bather went on to say that the circumstances are different for every customer and that each request would be considered on an individual basis.

The information that would be needed would probably be the letter you receive from your other credit card provider saying that your credit limit has been successfully reduced. This, along with the credit check that was conducted by your new card provider when you applied would then be used to see if more credit could be offered to you on your new card.

Increase your credit limit

If you have been offered a low credit limit and would like to increase your credit limit you can inform the credit card company that you would like a higher limit. If you do not have an excellent credit rating, this often results in little action, but it does mean that the company have a record of your request.

If you have checked your payment history and you have evidence that you have paid bills and debts on time, paid more than the minimum payment, and have not maxed out the credit available to you, the company might be more inclined to provide you with an increased limit.

At some point we all wish we had a higher credit limit so we could put down a deposit on a car, or book a holiday, or pay a bill, but it can be difficult to get an increase unless you have a genuine reason. If you want to increase your credit limit for something specific, you should mention this when contacting the company as they may be able to provide you with a temporary credit limit increase.

However, it is not impossible to increase your credit limit. There are ways of doing this over a longer period of time. In order for a creditor to offer you a higher limit, you need to prove to the lender that you are able to manage more borrowed money and debt. This means that paying off your balances in full, always paying on time, not putting in too many requests for an increase, and generally behaving like a responsible borrower all go towards persuading a lender to offer you a higher limit.

Compare credit cards

When you compare credit cards online you should be provided with a guide as to the maximum and minimum credit limits available. It is important that you look at this carefully when applying for credit cards so that you can be sure that the one application you do make is for the card that will best suit your needs and individual circumstances. You shouldn’t make too many applications for credit in a short period of time because it can have a negative impact on your credit score (it makes you look like you are desperate for money; money that you may not be able to pay back).

[More]

Prepaid cards are becoming popular in the UK with just about everyone. This is probably because of how useful they are in a number of different circumstances or to different age groups. They:

• Allow teenagers to make online purchases
• Save you money while travelling abroad
• Make managing finances and budgeting easier
• Cut down the risk of identity fraud
• Reduce the risk of loss, compared to carrying cash
• Allow for online re-loading and account management, including statements
• Can be used in place of a bank account – you can have your wages loaded directly on to the card and set up Direct Debits (on some cards)
• Have no risk of debt
• Don’t require a credit check or bank account.

Like anything, they do have cons as well, such as the small cost of getting and using a card, and the spending limits that are imposed to prevent money laundering. However, there are ways to keep costs to a minimum and it’s easy enough to increase your spending limit.

However, given the long list of advantages, there’s no doubt that prepaid cards could be useful to the elderly too.

What is a prepaid card?

Unlike a credit or debit card, there are no credit facilities on a prepaid card as you can only spend the money that you have pre-loaded onto it – similar to a pay as you go mobile phone. The cards are currently available from three providers in the UK; MasterCard, Visa and Maestro. Because prepaid cards are accepted wherever these providers’ cards are accepted, they can be used in millions of locations around the world, wherever you see the logo for the card you have.

How much do prepaid cards cost?

Prepaid cards can be ordered online, in stores, post offices, and by post. Although some everyday prepaid cards have a monthly or annual fee, the majority just have an initial set up cost, which is usually around £5 (you will usually find that those without a setup cost have a monthly fee and those without a monthly fee have a setup cost). Free prepaid cards are sometimes available.

There are some charges for transactions and ATM cash withdrawals but these a relatively low and are a small price to pay for convenience.

If you are planning on using the prepaid card on holiday, you might want to consider getting a travel prepaid card as well as an everyday card because the travel card will be a LOT cheaper to use abroad (and will be cheaper than using most debit and credit cards abroad).

How can a prepaid card help the elderly?

As you can see from the bullet points above, prepaid cards come with many advantages. Specifically thinking of the elderly, prepaid cards can help as a tool for managing finances (especially when on a tight budget), they will aid you in keeping your money safe as you no longer need to carry cash, allow you to pay bills and buy shopping online rather than having to leave the house, and help you to prevent identity fraud.

1. Budgeting

Pensioners often find themselves turning to credit to sustain their lifestyle because during retirement they are usually living on a much smaller, fixed income. It can be very easy to run up debt, but it is important that you don’t because it will become harder and harder to repay the outstanding balance. This, along with many other factors, makes budgeting an essential part of everyday life for a pensioner.

With a prepaid card, you can load the amount of money you have to spend on certain items at the start of the week, or when you receive your pension allowance. Once it has gone, you cannot spend any more, helping prevent the elderly from getting into debt. Cash flow can also be managed in separate parts. For example, if you receive your income once a month, you can pre-load a weekly amount on to the card so that you have not spent everything by the second week.

2. Keeping money safe

It’s likely that, since the demise of the cheque guarantee card and the reduced number of outlets accepting the cheque as a form of payment, pensioners are more frequently turning to carrying cash. Carrying large sums of cash is a huge security risk; particularly if you are seen as more vulnerable and have a set routine (it would be easy for a thief to know when you had visited the bank, for example).

Instead of carrying cash, load the money onto a prepaid card and use it to make your purchases. With money being so tight, this will help to reduce your financial losses if you are targeted by criminals because they would not be able to use the card without a PIN or without your address details (you can cancel the card as soon as you know it is missing and get your money back, minus a very small card replacement fee).

Additionally, prepaid cards are often seen as safer forms of payment that credit or debit cards because they are not linked to any personal information. Your bank accounts and private data is not attached to prepaid cards, reducing the risk of identity theft should the card be lost or stolen.

3. Carers

If you care for an elderly person or relative, you (or they) might not feel comfortable using their credit or debit card, or carrying their cash (in case you lose it and have to replace it yourself). You can avoid this scenario with prepaid cards because the person you care for can load the card with the amount of money required to do the shopping and you can run the errands and pay bills, without any of the usual risks. It is also possible to pre-load the card and view statements online so the cardholder wouldn’t even have to leave the house and could still keep track of their spending.

4. Independence

Unfortunately as we get older we often lose a lot of our independence, particularly when it comes to our finances. A prepaid card can provide the cardholder with a sense of control, and can offer the reassurance that they are managing their own finances because they don’t have to divulge any personal banking information or provide access to their accounts. Keeping money safe is often a priority for the elderly, so regaining control of their own finances is often a relief.

If you think you, or someone you know, could benefit from a prepaid card, make sure you do a comparison first to get the best card for your needs and circumstances. You might also want to check out our blog on how to pick a prepaid card before you start to compare.

[More]

We’ve all heard that many women spend their childhood dreaming of the day they get married; wearing the fabulous designer dress, being transported in a horse drawn carriage to the huge castle where they will wed the handsome prince – a wedding that would burn a huge hole in the finances of most Brits.

Fortunately, most of the time this really is just fantasy, although we all know someone who has spent far more money on their big day than they can afford.

For some of these couples who ignored the concept of ‘living within their means’ when it comes to their wedding, paying for it after the ‘honeymoon period’ ends could turn into a nightmare. Unfortunately, this nightmare could even potentially ruin their relationship altogether as they end up fighting over money while trying to make ends meet.

It doesn’t help that everyday household expenses feel like they are increasing by the minute. For example, this year we have heard that energy companies are hiking prices, petrol costs are soaring with no end in sight, and weekly food shops seem to have doubled in price. With these costs only going up, the stresses and strains begin to tell, but are couples sticking together or breaking apart?

The real cost of money struggles and debt problems are seen when relationships start breaking down. It’s that time of the month when the bills start landing on the doormat and, rather than communicating with each other about the problems we face, we row about how the bills are going to get paid.

A study of 2,000 people, conducted by Relate (the country’s largest relationship support service) and TalkTalk (a phone and broadband provider) in August 2010 found that money problems are becoming a leading cause of relationship breakdowns.

One in five couples worried about the effect the credit crunch will have on their marriage, with 18.8% finding this the biggest concern, “particularly those in groups between 25 and 54 [years of age]”.

Mel Merrit, a spokeswoman for Relate, said: “We know that money worries can be a big cause of arguments, in fact recently couples told us that money worries and fear of redundancy was the biggest cause of rows.”

In addition, a July 2011 survey by Sheila’s Wheels found that almost a fifth (19%) of couples polled said they regularly argue about money and over a fifth (22%) said that money was the main reason they started arguing. Another 12% of those who took part in the survey said they had considered ending their relationship with their partner because of money.

Are we heading for a life of loneliness? Or, are there ways to improve our money management now and stop finances ruining our relationships in the future?

Here are some tips for how to prevent love and money becoming a problem for you:

Communication

It is thought that couples will talk and communicate about pretty much anything before they sit down and discuss their finances.

Research conducted by First Direct in October 2006 found that less than three quarters (68%) of people would feel comfortable talking to their spouse/partner about their finances.

Jean Chatzky, author of “Talking Money”, offers advice for couples on how to talk about money in her book. She suggests that couples find a neutral time to sit down and discuss money management. It is not a good idea to start talking about your money worries when a bill has come through the door and your partner is wound up about paying it. Couples should pick a time and a date once a month to sit down and discuss their income, outgoings, responsibilities, problems and solutions. Ensuring you seek advice when you start getting into financial difficulties is also a must.

Mel Merritt said: “It is important that couples get help as soon as they can and discuss problems before they get too big.”

Financial infidelity

You may have never heard of the phrase, but most of us have done it at some point in our lives. Financial infidelity is the act of telling a lie or keeping something to do with money a secret from a partner.

The July 2011 study by Sheila’s Wheels found that the average Brit is hiding as much as £1,800 from their partner, of which nearly a quarter (23%) is debt. The Sheila’s Wheels survey also found that over a third (37%) of those polled have a “secret stash of money that they keep hidden around the home”.

A different First Direct study, conducted in March 2006, found that 19% of women have a stash of money that their partner does not know about, while an additional 25% have lied about purchasing something. In addition, 26% of couples said they felt that it was important for relationships and money to remain separate (rather than opening traditional joint accounts).

This act is by no means limited to women. When the Consumer Credit Counselling Service (CCCS) asked 1,500 of its clients about the matter, a third of men revealed that they had kept their debts a secret from their partner.

Budgeting

Creating a budget is one great way of getting back on track with your money management and preventing arguments. It is important that even if only one of you actually pays the bills, you both need to have the same responsibility for your financial plans. If you are both honest with each other and fully aware of how much is going in and out of the household, there will be fewer arguments.

Personal allowance

No matter how tight your budget, everyone needs to splash out on themselves occasionally, even if it is just a lunch out with work colleagues or a night to the cinema. Relationships and money will always be a sensitive topic, but if each person has an ‘allowance’ from the remaining disposable income, it prevents one party feeling guilty and/or jealous, and offers a sense of personal financial space.

Spending time together

It’s no surprise that fewer couples are spending less time together; in fact, according to a study ‘Married Only at the weekends’ by Reg Gatenby, Office for National Statistics, couples only spend an average of two hours and 30 minutes together each day, and even less for couples with children. It is important that couples make time for each other, to put their stresses and struggles aside for a short period of time, and enjoy each other’s company.  If you always had a joint dream, whether it was to travel across Europe or buy a Jaguar, set a little bit of money aside to go towards this, and prove that love and money does not have to cause arguments, it can also create your dreams and bring you closer together.

[More]

Recent years have seen our internet and broadband options change pretty rapidly – we have gone from the old dial-up connection through to super-high-speed broadband accessed via our landline or cable. In addition to fixed lines, we can now access mobile broadband too. However, not everyone is able to access all of these services as it often depends on where you live and what type of property you live in.

House broadband options (detached/semi-detached/terraced)

If you live in a house your broadband options are usually wide open because all types of broadband can be installed.

As of December 2010 the UK had almost 19.6 million fixed-line broadband connections making this the most common form of broadband in the country, although other technologies are growing in popularity.

If you get cable broadband, you don’t necessarily need to have a phone line (although for a bit of extra money you should be able to get a heavily-subsidised phone deal with a broadband service as part of a ‘bundle’).

If you live in a house and need a phone line to have broadband it is relatively straightforward to have a line installed, although it could cost you up to £130.

Once you have (or don’t have, whatever the case may be) a telephone line, you will need to get a broadband package from an internet service provider. It is important that you shop around and compare broadband packages as they can vary by quite a lot depending on the bundle you require.

Flat/apartment broadband options

Flats and apartments have similar access to broadband services as a house – it’s only dependent on the area that you live in.

Flats are not restricted to fixed line broadband; cable is also a possibility, even in a high rise.  Access to cable broadband is more common in urban areas as it currently only covers around 51% of the UK.

Although coverage is limited, cable broadband is able to deliver much faster speeds than ASDL (through a phone line) broadband so it might be worth visiting Virgin’s cable broadband post code tool to see if you live in a cabled area.

Houseboat broadband options

Living on a houseboat in the UK is not that uncommon due the canals that pattern our landscape, in fact, around 15,000 people live on the water across the country.

Obviously, your broadband options are more limited on a houseboat because it is impossible to get access to cable or fixed line broadband on the boat itself, however there are some alternative options available to you. One of the most popular ways to access the internet onboard a houseboat is via wireless broadband. You will find that many marinas and docks have a Wi-Fi hotspot, meaning that as long as you have access to a computer with a Wi-Fi connection, you can get online.

This could restrict your access because you might find that you are out of range or your marina does not provide the service. In this case, the best way to get online would be via an internet dongle, or mobile broadband. These rely on 3G connections, which operators claim to cover 90% of the UK, but due to the rural areas a houseboat is likely to travel in, Mi-Fi (which uses the 3G network) could potentially be a better investment.

Mi-Fi is basically a mobile broadband modem allowing you to create your own wireless broadband ‘hotspot’ wherever you go. Having access to Mi-Fi on board a houseboat would allow you to surf the web whenever you please.

Remember to compare broadband packages before committing to a long term contract, whatever type of broadband you decide is most suitable for you and the type of property you live in.

Problems and other types of broadband

We know that houses have many broadband options open to them, but the availability of fixed line broadband services will depend on where you live. According to Ofcom, in May 2011 more than 75% of residential broadband connections in the UK were delivered by ADSL, meaning that you could be in an area where there is no broadband connection, known as a ‘not-spot’.

In this case you would have to seek alternative solutions, such as Mi-Fi. There are a couple of other alternative ways to access the internet when ADSL and cable broadband is not an option: satellite internet and fixed wireless broadband.

Satellite broadband

Satellite broadband connects to a network via a satellite, just like satellite TV. This means that you would have a satellite dish installed, either by the provider or an independent dealer. Satellite internet isn’t very popular because of the relatively high costs involved in the initial set up and the monthly fees. You can expect to pay around £200 for the installation package and around £30 per month for your data  but this again will depend on the provider. Just as with any other type of internet, remember to compare broadband packages to ensure that you are getting the best possible deal.

Fixed wireless broadband

Fixed wireless broadband works in the same way as any other wireless broadband, although it is fixed to a specific location known as a ground station or transmission tower. The speeds available are not as good as other internet connections but it is an ideal solution for people struggling to find a connection via the more popular methods. A major limitation is that the ground station needs to be within the line of sight of the subscriber.

Summary

• Houses and flats have all broadband options open to them but what you can access will be dependent on the area you live in.
• Houseboats and other alternative dwellings are probably better finding broadband access via Mi-Fi, satellite internet, fixed wireless, or Wi-Fi connection.

[More]

Post Author: Marghaid Howie, Gas and Electric Reporter

E.ON and Scottish & Southern Energy (incorporating Atlantic, Southern Electric, Scottish Hydro & Swalec) will raise their prices on 13th & 14th September respectively, leaving millions more energy customers with higher gas and electricity bills. Price hikes by Scottish Power and British Gas have already come into effect, and EDF Energy is now the only major supplier not to announce a price rise this summer.

So why has it all happened? Record wholesale gas prices, conflict in the Middle East and the introduction of new green taxes have all been cited as causes for the rising cost of domestic and business gas and electricity. There is no definitive answer, but the fact is that it has happened, and customers simply have to take matters into their own hands to protect their finances.

Despite the trend of rising prices, most customers can still save a great amount of money by switching energy tariff or supplier. EDF has so far held firm with its cheap fixed tariffs and online deals, although they could be withdrawn at any minute. And although Scottish Power has increased its standard rates, it has recently launched a cheap fixed tariff and a £30 cashback offer to entice customers.

With the typical bill approaching £1,300 per year after these price rises, households could save hundreds of pounds by switching to a cheaper tariff.

[More]