Payday Loans, do we need them?

Payday loan is the practice of loaning out short-term payments with extortionately high interest rates. With some interest rates reaching up to 2000% it’s no surprise that many Brits are against the practice. Furthermore, the lack of efficient financial background checking of the recipients of these loans has increased criticism surrounding the practice. However, payday loaning is a lot more necessary than its critics would have you believe.
The Anger
Angry sentiment against payday loaning has continuously been expressed by members of the public in recent months. In early August, renowned British television presenters Ant and Dec faced a Twitter backlash after the duo’s ITV show ‘Red and Black’ sponsored payday loan company Wonga. The disparagement rose to the extent that Labour MP Stella Creasy asked the presenters to use their influence to speak out against the deal. She also urged her followers to send a message to the showbiz duo condemning their association with the program and thus subsequently the payday loan company. Creasy called for there to be caps on the cost of credit for the loans paid out by payday loan companies, before the practice can be justified.
Furthermore, the same company Wonga were recently banned from advertising through the English Football League, after a number of fans protested against their football clubs being associated with a payday loan company.
Another criticism levelled out against payday loan companies is that the lack of a rigorous financial background check means that loans can be taken out by people who do not have the means to pay the money back. Presenter Anne Robinson on the BBC One program ‘Watchdog’, pressed a representative of Wonga on this, before which it was explained to her that the very lack of an efficient financial check is why so many people willingly choose payday loans.
Unjustified Anger
The anger behind payday loans is unjustified for a number of reasons. Firstly, it must be reminded that those who take out payday loans do so willingly, and in the knowledge of the very high interest rates. The fact of the matter is that the recipients of payday loans simply need the money so desperately that they’re more than willing to take on the high interest rates.
Furthermore, the desperation of many people needing payday loans means that they either haven’t got the time for a rigorous financial background screening, or haven’t got the credit history for it to not hinder their loan process! After all, people who feel as if they have no other option but to take out a payday loan are most probably in financial peril and those in financial peril are more likely to have had financial problems in the past than others.
In essence, payday loaning is a needed practice, especially in the currently tough economic climate. In addition, while credit caps may prevent people from racking up huge loan costs through interest fees, it would be a policy that’s incompatible with the very nature of payday loaning.
The British public aren’t stupid. And those who take out payday loans know exactly what they’re getting themselves into.

Office of Fair Trading

Payday loan companies have been praised for being more flexible when it come to making loans available to their customers where traditional lenders such as High Street banks are unwilling to lend and rather slow to make fund available to customers where they have decided to lend. Critics of Payday loan companies however criticised them for the extremely high interest they charge and the fact that their are not quite stringent when it come to verifying the identity of their customers. One Payday loan company; MCO Capital is paying the price for lack of rigour when it comes to verifying its clients identity.

MCO Capital which trades online as Help Loan has been shutdown by the OFT (Office of fair trading) after the firm was duped into making loan available to up to 7,000 fraudulent customers who use the identity of other people to obtain loan from MCO Capital. MCO Capital then pursue the real people who’s identity was stolen and made them pay back the loan they did not obtain in the first place. Office of fair trading said MCO Capital broke the anti money laundering rules by not checking identity of their customer properly hence they were closed down and fined £544,000.

OFT spokes man David Fisher said: “MCO’s failure to put adequate procedures in place made it vulnerable to fraud.

“The way in which MCO then wrote to consumers to collect debts caused unnecessary distress and inconvenience to thousands of people.” The story of MCO Capital and the identity fraud was first reported by BBC money box programme as follows: Help Loan had only started operating in August that year but had quickly been cheated of more than £1.5m, which it then attempted to recoup by sending aggressive letters to the people whose identities had been impersonated.

The law government private money lenders and debt collectors has recently been straightened by the government through the Financial Services Bill, which give the OFT the power to stop immediately rogue money lenders.

Effective use of credit cards

Credit cards have been one of the most important innovations in financial services because they opened up the possibility of consumers having access to affordable credit that they can use for all types of needs. The rise of bad credit payday loans has changed how people gain access to consumer credit however this has not changed the importance of credit cards. If you are considering using credit cards but you want more tips, check out the top tips below on how to use them properly:

To make purchases: Credit cards are excellent ways of making purchases especially online. They allow you to purchase an item or a product and you can simply pay off your purchase straight away or you can make minimal payments each month. Credit cards have been revolutionary in helping people shop, so if you are someone who needs to make purchases every now and then, you can do this online or in person by using credit cards.

For travel: If you are planning to go on holiday to a destination such as the US, you need to have a credit card if you are planning on reserving hotel rooms or you need to pay for things. Credit card companies such as American Express are extremely popular especially because credit cards were pioneered in the US. Fast cash loans could be an option, but credit cards supplement travelling because they allow you to be seamless in your travel experience as they are accepted in most countries especially places like the US and Canada.
Emergencies: Credit cards are important in emergency situations whether there is a sick relative in your family or if you have an unexpected bill that you need to pay.

What you need to know about credit cards
Pay it off in full: The trick with credit cards is using them in a way that benefits you, not the bank. The way you can do this is by paying them off in full every time that you use them. By doing this, you don’t incur interest charges that you will need to pay.
Or pay more than the minimum per month: Your credit card provider will give you a minimum payment that you have to pay each month. This minimum payment will have interest on it. If you can’t afford to pay off your balance in full each month, then you should consider paying more than the minimum payment to make sure that the interest hit is not as large as you think it would be.
Credit cards build credit history: If you have dreams of applying for a mortgage one day, you need to build a credit history file that mortgage lenders will see. One of the best ways to do this is to use credit cards to create a profile of yourself as someone who borrows responsibly.
Choose the card with the manageable limit: You should pick the credit card that has the limit that you can manage. By doing this, you are borrowing within your capabilities.

Life Insurance

The current economic climate meant that household budgets are being squeezed from many direction as families across the country tightening their belt to fit the new economic reality. Increasingly, while people are reviewing their expenditures and cancelling services they pay for but do not use, such as that expensive gym membership that only get used a few time a year, that extended warranty on electric appliances you are ever unlikely to use and of course that Insurance premium you seem to pay without any obvious benefits.

There is no reason why you should not review your insurance premiums as part of your household budget review, it is however extremely important to take care not to throw the baby out with the bath water. One of the most important insurance the breadwinner of every family must have is life insurance , but when reviewing outgoing expenses, because no tangible benefit seem to come from having a life insurance in our day to day life, we may lose sight of the importance of life insurance to a family’s security. A quick basic review of some of the popular insurance and how we can save money on them follows.

Mobile Phone Insurance
The first place to offer you mobile phone cover is your mobile phone service provider. Most of the time the commonsense approach is to have all the services related to your mobile phone with your provider, this may make common sense but it is not necessarily the cheapest option. You may well find out that the best cover for your mobile phone is the one provided as part of your premium current account bundle by your bank. In some cases, especially if the mobile phone is not very expensive, forgoing insurance may be the best option.

Life Insurance / Critical Health Insurance
This is probably the most important insurance for a family man or woman who wants to ensure his or her family is protected against the big challenges life can throw into people’s path now and again. Some people are lucky to have life insurance and critical illness cover as part of their remuneration package at work, for self employed people it is absolutely important that you have the right life and critical illness cover.

If you have already taken our life insurance, is your cover the best you can get for the premium you are paying? It could be time to review your premium and the cover you are getting, it may well be time to move to another life assurance company either to maintain your current payment and get better protection for your family or reduce your monthly payment and still get the same level of cover you enjoy at the moment. If you must cut spending on insurance products, life insurance should be one of the last to look at. Here is a reminder of some of the protections life insurance can offer you family.

It is beyond the remit of this article to go into every conceivable details about the protection life insurance offers a family, the basics of the benefits start with mortgage protection. If you have a mortgage, should anyting happen to you, you certainly want your family to keep the roof over their head, in fact some mortgage providers insist you take out a life cover before mortgage is made available to you. A life insurance will help you pay off your mortgage should you or your partner die before paying off your mortgage. Some life insurance have critical illness options built into them.

Life Insurance is also useful for seeing your children or dependant through their education should you die suddenly. There are several life insurance providers out there. If you are shopping for life insurance or looking to save money on your existing life policy, you may want to check out Beagle Street, they offer some of the most competitively priced life insurance and critical illness cover on the market.

The follow up to this article will look into how you can save money on car, home content, pet and other insurance policy.

What you need to know about car insurance

Car insurance is a necessary but often confusing purchase. In order to be certain that you have the right cover amounts, you have to do your research. It takes some time to find the right policy and get it at the right cost. In order to find the right car insurance cover, you will need to first understand the basics of car insurance and the types of policies that are available.

Third party insurance is the minimum legal requirement in the UK. If you are planning to drive your car on public roads you simply must have this amount of cover or higher. A third party policy will cover you while driving if you are involved in an accident that damages another person, vehicle or property. This cover will protect you whether the accident is your fault or another driver’s fault. You should understand however that this amount of cover is very limited. It will not pay for your vehicle should it become damaged by fire or if it is stolen. This is a good cover amount if you drive an old runabout but if you have a higher priced car you may want to go with a better cover amount. The cost of third party cover will be less expensive than comprehensive but again, you should weigh your options and do your research before choosing any insurance cover for your car.

Third party fire and theft cover gives you a bit more protection than basic third party cover. You get the same protection as the above mentioned cover but with an added layer of protection for your car if it is stolen or damaged by fire. The premiums will be based on different factors such as the type and age of your car and any security features that your car offers. Be sure again that you are doing your research to ensure that you get the right cover amount and terms. You may want to compare third party theft and fire cover to a comprehensive policy just to see if there is a major difference in the cost. You may actually be better off with a policy that covers everything.

Fully comprehensive covers you completely. Many choose this cover because it will protect them from legal aspects of causing an accident and also cover the damage to their car. Fully comprehensive protects you from a number of risks but you should take your time to compare a few policies before choosing. Not all fully comprehensive policies are just alike. Some may insure you to drive someone else’s vehicle or to drive your car abroad while others may not. You should always read carefully over the policy terms and conditions to be certain that you are getting the cover that you need.

You can also purchase add-ons for your fully comprehensive cover policy. Add-ons include legal fee insurance and breakdown cover. Many have found that it is often less expensive to purchase a breakdown policy separate but this is something that you will have to research based on your own car cover needs.

Travel Insurance

Travel insurance will protect you in many ways. If your flight is delayed for instance, this cover will compensate you. If your baggage is lost or stolen while you are on holiday or if you become ill or injured, travel insurance can be very beneficial. Note that the amount of cover and the incidents that are covered will vary by insurer so it is important to pay attention to the policy that you choose. Comprehensive cover typically protects you for medical treatment, theft, cancellations, emergency repatriation, public liability and loss of baggage.

There are many different types of cover available and policies will vary depending on the cover that you need. These policies can be chosen depending on the length of your holiday, your age, the activities that you will be taking part in and who you are traveling with. Single trip insurance is the most common type and typically covers you for just one trip. You can purchase single trip cover for yourself or your entire family. This cover is purchased before your trip and is only valid for that one trip.

Annual multi-trip travel cover is a good choice if you travel abroad frequently. If you plan to travel more than two times in one year, this can be a bit less expensive than single trip cover. The total number of trips that you are covered for will depend on our policy but most insurers allow limitless trips under the same policy. Annual policies last for twelve months from the time of purchase but be sure that you read your terms carefully. There may be a limit on how long you can spend abroad on each trip.

Worldwide travel cover is a good option if you are planning to travel outside of Europe. If you wish to visit Australia or America or another country outside of Europe you will need to purchase worldwide cover. You can also purchase family travel cover that will protect your family for a cheaper price if you are traveling abroad together. Family cover may be a bit more expensive depending on where you are traveling but most policies offer free cover for children under 18.

Group travel cover is another viable option if you are taking holiday with a large group. If for instance you are planning a trip for a stag or hen weekend then you can purchase a policy that will cover everyone in your group. Most policies will require you to depart from the same country of origin and may include an additional fee for activities that you may partake in on your holiday. This is another reason to really read through the policy before you purchase it.

Taking a holiday is an exciting time. You should not let your excitement turn to anxiety over unexpected delays, illnesses or other incidents. Take the time to learn more about travel insurance cover and ensure that you choose the right policy for your next trip.

Home content insurance

Choosing the best home content cover for your needs may seem difficult. You need to weigh many factors when selecting the right cover amount. When you choose the right policy, your belongings will be protected from loss and you will receive compensation quickly should a catastrophe strike. Keep in mind these things when choosing a home content cover package:

Valuate your contents properly – This is extremely important when choosing home content insurance. The insurance agent will ask you to provide an estimate of what your belongings are worth. You will need to list out all of your assets and provide each with a reasonable value. Of course you will not need to place a value on every single fork or knife that you own, but make sure that you are getting a good overall estimate of what they are worth and what it would cost to replace those items if you need to do so.
Understand Your Cover Limits – No matter what specific home contents policy you choose that policy is not going to cove ever single item or every loss scenario. You want to be certain to read your policy details before you sign the policy. Know what is covered in every loss and what specific items are covered.
Discounts May Not Be Worth It – There is such a thing as “You get what you pay for.” This is especially true when dealing with insurance cover. Make sure that the discount policy you purchase is not going to cost you in the long run. You may want to avoid discounts that seem too good to be true. They probably are too good to be true.
Choose Separate Cover for Collections – If you are an avid sports fan and you have a collection of sports memorabilia or any other vintage or antique belongings, be sure that you purchase separate cover for these collections. You will want to have your collection appraised and then choose cover that will replace these items at the appraisal value. Your regular home contents insurance may not cover antiques and other collectibles for what they are actually worth.

You will likely find many policy types, cover amounts and premium costs when shopping for home contents insurance. Take your time and ensure that you get the right policy for your specific needs. Shop around and be sure that you fully understand what is included in your policy and what you may need to purchase extra cover for.

Resources

Askinz Resources Page

Welcome to Askinz Portal resources page. You will find information and link to websites related to any of the financial produces and services we blog about. If you run a website you think out readers may find useful, please use the contact form to inform us and we will consider adding your site to this page.

Financial Services Ombudsman. – Independent services for settling financial dispute.

Balance transfer for credit card debt –

It’s often beneficial if you try to consolidate your credit card debt. Some of the advantages are described below:

You just need to pay off a single balance
A single interest rate is applicable
Maintaining records becomes easier
A single check has to be sent every month
The rate of interest is often lowered (especially when your balance is transferred from a card with a high interest rate to another card that charges a lower rate)

In spite of so many benefits, a credit card balance transfer also has some disadvantages –

Balance transfers can be truly helpful when you’re in credit-card debt, but before you opt for it, you must be aware of the risks as well:

Some of your balance transfer requests may be approved while the others may not be
In the end, you might be paying a much higher interest rate than you currently have
Some of these balance transfer offers come with a big upfront payment
You may start feeling that it’s tough to repay one huge debt (as you watch your balance getting reduced more slowly than with your previous ones)

Many people who are scared of ‘debt recycling’ won’t encourage you to go for consolidation. But you mustn’t let others decide what’s right and what’s wrong for you. Choose different repayment options and compare them yourself. You should never be scared of exploring various debt relief strategies. While one of them may not work in your case, the other ones might. You’ll eventually find the plan that suits your specific needs.

Always remember that a balance transfer helps you only when the new card is more advantageous than your previous card.

A number of credit cards in the U.K. are offering lucrative balance transfer offers, namely – Barclaycard, Nationwide Building Society Card, MBNA Balance Transfer Card, Royal Bank of Scotland Platinum Card, NatWest Platinum Card just to name a few. So, in order to be sure that a balance transfer is the best option in your situation, check out the following features now –

Keep an eye on your offer: You must know the duration of an offer before you spend a single cent. These offers may change frequently, so it’s always better you keep a note of all updates.
Don’t overlap balance transfers: You should make balance transfers within the specified time. This will help you to avoid unnecessary overlapping and paying for high interests.
Know the fees: Some of the cards have a yearly fee attached with them. It’s natural for a balance transfer card to charge a high yearly fee, as their interest rates are pretty low. You’ll have to decide at this point whether you’d like to go for this card or not.
Check out the interest-free method:
Go through the documents: The fine print has to be read carefully before you sign-up. Look for the 0% APR offer, check if your balance transfer is included within this percentage and know for how long this APR will remain static.
Check out the accreditations: Always go for a trust-worthy name. Don’t fall pray to an offer that seems lucrative. Always remember, that these card providers are actually earning high profits by way of interest charges and client fees. It’s thus necessary, that you focus on the balance transfer features before you enroll with a card provider.