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Payday Loans Dangerously Tempting Brits

By Jessie Wilkens on January 4, 2012 in

A recent report put out by the homeless charity Shelter says that approximately one million Brits have taken a payday loan in order to cover their monthly mortgage or rent expenses.  Rather than face losing their homes or their rental units, they are resorting to using overdrafts, personal loans or credit cards.

The chief executive of Shelter, Campbell Robb, said, "These shocking findings show the extent to which millions of households are struggling to keep their home."  Mr. Robb warned that a payday loan is, of course, a terrible and dangerous way to try to pay for basic expenses since they can "quickly lead to debts snowballing out of control."

 Consumer groups have turned on payday loan companies, which is an industry worth close to £1billion a year, since they make it too easy to borrow money.  And, most people don't realize just what borrowing that money will mean for their bottom line.  Some companies advertise that they will transfer as much as £1,000 into a bank account within 15 minutes of the application.

Martin Lewis, the founder of the website called MoneySavingExpert.com said that Britain should not allow payday loan companies to function in the country.  As he said,  "Many struggling with rent or mortgage commitments will struggle to repay payday loans on time too. It is an obvious temptation to grasp these loans as a lifeline, but in the long run, it may hurt more than help."

A recent report put out by the homeless charity Shelter says that approximately one million Brits have taken a payday loan in order to cover their monthly mortgage or rent expenses.  Rather than face losing their homes or their rental units, they are resorting to using overdrafts, personal loans or credit cards.

The chief executive of Shelter, Campbell Robb, said, "These shocking findings show the extent to which millions of households are struggling to keep their home."  Mr. Robb warned that a payday loan is, of course, a terrible and dangerous way to try to pay for basic expenses since they can "quickly lead to debts snowballing out of control."

 Consumer groups have turned on payday loan companies, which is an industry worth close to £1billion a year, since they make it too easy to borrow money.  And, most people don't realize just what borrowing that money will mean for their bottom line.  Some companies advertise that they will transfer as much as £1,000 into a bank account within 15 minutes of the application.

Martin Lewis, the founder of the website called MoneySavingExpert.com said that Britain should not allow payday loan companies to function in the country.  As he said,  "Many struggling with rent or mortgage commitments will struggle to repay payday loans on time too. It is an obvious temptation to grasp these loans as a lifeline, but in the long run, it may hurt more than help."

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Retail Recession Hits La Senza

By Jessie Wilkens on January 2, 2012 in

Retailers are feeling the effects of the economic downturn. The latest fatality is the lingerie retailer La Senza is shutting down 81 of its stores, resulting in hundreds of job losses.

Industry analysts are predicting that as many as 30,000 retail jobs could be wiped out this year and they are coining the period a "retail recession."

The hit to La Senza will wipe out over 50% of its stores, with 81 of the 146 locations planning to close. In total, the La Senza chain that was started in Canada in 1990 has over 480 stores in 45 countries.  At its high point, the Dragon's Den star Theo Paphitis actually owned it and reportedly sold it for £100million in 2006.

And if La Senza can't make it, it certainly doesn't bode well for other retailers. La Senza, after all, had former Miss England Katrina Hodge modeling for them and had a brand of lingerie created through the chain by pop group The Pussycat Dolls.

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Employment News Update

By Jessie Wilkens on December 28, 2011 in

If you’re in the market for a job in the UK, there is bad news ahead. A new study from the recruitment website Totaljobs.com shows that on average 23 people chase each and every job in Britain.  The job type with the most interest today is the type that requires no professional skills and the look ahead shows that we are “heading inexorably towards recession.”

For roles in customer service, as secretaries and in retail, the past year has seen a rise in applications by over 50%.  As John Salt, the director of Totaljobs.com reported,

“The omens for 2012 are pretty grim. For starters, we are heading inexorably towards recession with no real end in sight.”

As Mr. Salt further explained, “uncertainty around the future of the euro threatens to pull the whole economy back into recession.”

Dr. John Philpott, the chief economic advisor of the Chartered Institute of Personnel and Development said that “The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008/09.”

In addition, for workers who keep the jobs they already have or for those who do find employment, the average pay increase will be 1.5% which is far below inflation.

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Credit Card Users Getting Relief Soon

By Jessie Wilkens on December 26, 2011 in

New laws about to be unveiled today will offer some relief to credit card users. Hidden credit card fees cost customers more than £300 million a year for everything from plane flights to cinema tickets. At the moment, debit card companies can’t put surcharges on debit cards, and with the new plan that Chancellor George Osborne is drawing up, this will extend to all cards.

Earlier this year, a damning report was issued by the Office of Fair Trading that pointed to the widespread problem of credit card scams. The report was written following a campaign by the consumer rights group Which? to look into more than 50,000 complaints about rip-off card deals.

As a result, starting in mid-2014, an EU Consumer Rights Directive will ban businesses from putting above-cost surcharges on any form of payment. To get these practices in place even sooner, Treasury Minister Mark Hoban will be announcing a consultation to ban the practice by the end of 2012.

As Mr. Hoban, the Financial Secretary in the Treasury said,

‘We want consumers to be able to shop around. They have a right to understand the charges they may incur upfront and not be hit through a hidden last-minute payment surcharge. We’re leading the way in Europe by stopping this practice. The Government remains committed to helping consumers get a good deal in these difficult times.”

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Warnings about Long-Term Bonds

By Jessie Wilkens on December 21, 2011 in

Be careful about linking your money to inflation for the next six years, warns Andrew Goodwin, an economic consultant with ITEM club. Many people who have been avidly saving their nest eggs are now being targeted by banks that want them to put their money into long-term bonds.

Experts, however, are warning savers that these accounts may not be all that they’re cracked up to be, as the inflation rates may have peaked.

As Justin Modray from the website candidmoney reports,

“There are so many uncertainties in the economy, including the Eurozone. What really matters when buying inflation-linked bonds is future inflation, not the current rate. Buying products based on the current retail prices index (RPI) is potentially misleading, especially as inflation looks more likely to fall than rise over the next few years.”

Those in the know say that, instead, people who are looking to save would be better off with a fixed-rate bond.

As Kevin Mountford from Moneysupermarket said, “One and two-year fixed-rate bonds rates look good value as inflation is expected to fall. The index-linked deals are on sale when the inflation is at an all-time high.”

Vis-a-vis investments, it is worth contacting companies that have developed tried and tested hedge fund strategies with a solid reputation when considering trying to make substantial profits.

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Crackdown on Mortgage Lending

By Jessie Wilkens on December 19, 2011 in

Borrowers looking for a mortgage might be shocked by what they find. The UK financial watchdog just announced a new crackdown on lending. Certainly, no one wants a situation of irresponsible lending to arise. To this end, the Financial Services Authority is creating stricter restrictions on the approval of home loans.

The new proposal forces those looking for a mortgage to provide much more detailed evidence of their household spending – including almost everything from their gas usage to their childcare costs.

The FSA has pointed out that more than half of current borrowers in the UK over 50 have mortgages that continue well beyond the age of 65.

The Mortgage Market Review said,

“The degree of scrutiny that the lender applies may vary according to the period of time remaining to state pension age. The closer it is, the more robust the evidence of the level of income in retirement should be.”

The Council of Mortgage Lenders has actually estimated that 45,000 homes may be repossessed next year – and that is up 20% from an estimated 37,000 from 2011. The FSA has further warned that, while low interest rates have helped in some cases for borrowers, they are actually quite dangerous because some homeowners can’t meet their repayments when the rates go up.

The FSA’s plans will be published next summer and implemented no sooner than the summer of 2013.

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The Portas Review

By Jessie Wilkens on December 14, 2011 in

Mary Portas was recently brought in by Prime Minister David Cameron to report on the declining retail market in England – and to offer up suggestions for stopping the crisis. Her recent report contains 28 recommendations and a warning that the retail industry has reached a “crisis point.” The super-malls, out-of-town supermarkets and internet shopping are all creating this issue, she reports.

The Portas Review offers hope for a better retail future. As Mary Portas reports, “So I have come up with a model that gives an opportunity for other types of business to come on to our high streets.”

Just in the last two years, according to Portas, town center vacancies have doubled. She said, “We need to stop seeing our high streets as just shops. We now need to get people back into our high streets and that requires creating a place that is about enjoyment, creativity, learning, socialising, wellbeing, health.”

Miss Portas recommends that planners need to support town-center developments instead of new malls. She thinks that all mall applications need to be referred to ministers before they are approved.

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Cyber Monday Picks Up Steam

By Jessie Wilkens on December 12, 2011 in

Cyber Monday, nicknamed for the first Monday in December, and the busiest internet shopping day of the year, has made Amazon a very happy place. Amazon’s British arm sold more than three million items on that one day, making it their busiest single day ever.

E-Reader Craze

Their most popular item was the Kindle e-reader. As Christopher North, managing director of Amazon.co.uk, said:

“This year, Cyber Monday saw the most items ever ordered in a single day with Kindle being the stand-out product.”

Brick and Mortar Results

Regular brick-and-mortar stores are also breathing a sigh of relief, as they slashed prices to lure in Christmas shoppers with some good results last weekend. Last Saturday, over 1.5 million shoppers spent £180million in Central London, according to information from the New West End Company.

As Chief Executive Richard Dickinson from the New West End Company said,

“Based on past experience we were confident that despite the slow start to seasonal spending, shoppers would get the tills ringing over the next two weeks, but this weekend has exceeded expectations.”

While retailers have seen less-than-exciting sales up until now due to warmer weather in October and November, rising food prices, and the recession, they are starting to see more sales at this time.

Interestingly enough, the Kindle e-reader is outpacing everything else at the moment, as Amazon reports that they are selling 105 e-books for every 100 printed books.

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Bleak Figures Ahead for Holiday Shopping

By Jessie Wilkens on December 7, 2011 in

With Christmas around the corner and retailers relying on this period for much of their profits in the quarter, retailers are bracing for a difficult winter. The British Retail Consortium reported a 1.6% fall in underlying sales for November. These figures are the worst that have been posted for half a year, and send a foreboding sign to retailers.

The combination of the difficult financial times and the warm weather have meant that winter stocks have been hardest hit – but that all non-essentials are feeling the pain. The BRC warned that the figures create a bleak picture of what is ahead.

As Director General Stephen Robertson said about the figures,

“The weakest increase in sales for six months suggests consumers are keeping a tight rein on their spending, despite Christmas being so near. Consumers are not quite in the Christmas mindset yet, although stores are working to generate much-needed sales with high levels of festive discounting.’

Many other research figures show a similarly bleak picture. the High Street Sales Tracker, which is put together by accountant BDO, showed underlying sales fell 1.7% last month, while the Experian Footfall Retail Index showed a 4.14% drop in sales over the last weekend.

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British Government Helping Out Bombardier

By Jessie Wilkens on December 5, 2011 in

The government is going to be stepping in and helping out troubled Derby train maker Bombardier. They have recently considered closing their Derby plant after losing an important contract worth £1.4 billion for Thameslink trains.

The government has decided to put up £80 million subsidizing Bombardier and making it easier for them to win a £250 million Southern Railway contract that they are currently bidding on.

The Derby factory is very important to the government, as they are the last train-making plant left in Britain. Their last contract runs out in 2014 and they have expressed frustration that they’ll need to close if other contracts don’t come their way quickly. Now trying to revive manufacturing in Britain, the government certainly doesn’t want Bombardier to close.

As a result, the government is also working on new procurement rules to help British bidders to have more change of winning contracts. The Bombardier company has explained that they can only stay open if they win both the Southern order and a £120 million CrossCountry contract they are currently bidding on.

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