Be Debt Smart For 2006
LONDON (Reuters) - Britons should make it their New Year's resolution to cut up expensive store cards and switch loans, overdrafts and other card debts to cheaper alternatives, financial experts said on Friday.
Price comparison Web site Moneyfacts said thousands of consumers paid over the odds for their borrowing whilst at the same time receiving "measly returns" on savings and current account credit balances.
"The lethargic stance taken by people who are prepared to stay loyal to a financial provider no matter how poor the deal they are getting can prove an expensive mistake," said Moneyfacts spokesman Andrew Haggar in a statement.
The difference in interest paid by mainstream providers on their instant access savings accounts could vary be as much as 4.16 percent, Haggar said, meaning that an investor with 2,000 pounds in savings could earn 100 pounds more each year in interest simply by switching provider.
Nationwide Building Society said the first step for anyone looking to overhaul their finances in the New Year was to pay off and cut up any store cards.
Store cards offered by Burton, Oasis, Toys R Us and BHS each charged an annual rate of at least 29 percent. Either paying off those debts first, or switching them to a cheaper credit card could save hundreds of pounds.
Nationwide chief executive Stuart Bernau said even those who did not have store cards could still making savings by listing all their debts and tackling the most expensive first.
"Many people's finances are stretched after Christmas so the New Year is the perfect time to look to make savings," he said.
However, applying for cheaper credit was not necessarily a straightforward process, Stuart Glendinning of financial comparison site Moneysupermarket said.
Ninety-three percent of loan providers advertised "typical" loan rates that were not available to everyone, he said.
Borrowers who applied for such loans but subsequently didn't accept them because they didn't offer the best rate, could also be adversely affecting their credit rating, reducing their chances of getting a good deal in the future.
"Consumers would be wise to check they will benefit from a good rate before switching debts over," Glendinning said.
Consumers with credit card balances and overdrafts of 5,000 pounds, all with high street banks, could save more than 600 pounds in the first year in interest payments alone by switching those debts to one of the cheaper loans on the market, he said.
Price comparison Web site Moneyfacts said thousands of consumers paid over the odds for their borrowing whilst at the same time receiving "measly returns" on savings and current account credit balances.
"The lethargic stance taken by people who are prepared to stay loyal to a financial provider no matter how poor the deal they are getting can prove an expensive mistake," said Moneyfacts spokesman Andrew Haggar in a statement.
The difference in interest paid by mainstream providers on their instant access savings accounts could vary be as much as 4.16 percent, Haggar said, meaning that an investor with 2,000 pounds in savings could earn 100 pounds more each year in interest simply by switching provider.
Nationwide Building Society said the first step for anyone looking to overhaul their finances in the New Year was to pay off and cut up any store cards.
Store cards offered by Burton, Oasis, Toys R Us and BHS each charged an annual rate of at least 29 percent. Either paying off those debts first, or switching them to a cheaper credit card could save hundreds of pounds.
Nationwide chief executive Stuart Bernau said even those who did not have store cards could still making savings by listing all their debts and tackling the most expensive first.
"Many people's finances are stretched after Christmas so the New Year is the perfect time to look to make savings," he said.
However, applying for cheaper credit was not necessarily a straightforward process, Stuart Glendinning of financial comparison site Moneysupermarket said.
Ninety-three percent of loan providers advertised "typical" loan rates that were not available to everyone, he said.
Borrowers who applied for such loans but subsequently didn't accept them because they didn't offer the best rate, could also be adversely affecting their credit rating, reducing their chances of getting a good deal in the future.
"Consumers would be wise to check they will benefit from a good rate before switching debts over," Glendinning said.
Consumers with credit card balances and overdrafts of 5,000 pounds, all with high street banks, could save more than 600 pounds in the first year in interest payments alone by switching those debts to one of the cheaper loans on the market, he said.
posted by Your Friends @ Myvesta.org.uk at
1/02/2006 06:31:00 pm
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