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The UK’s Poor Get Poorer as They Face Biggest Squeeze
The UK’s poorest families are the ones getting the biggest financial squeeze out of any household levels of wealth. The Trades Union Conference (TUC) has been analysing official figures that show that the UK’s poorest families are the ones feeling the financial squeeze more due to lower wage rises and higher rates of inflation.
Slower rising wages and high inflation which is affecting important bills such as food and simple utilities are making wages for lower paid UK citizens fall at double the rate of richer people.
The Office for National Statistics (ONS) figures show that in the last year for the bottom 10% of earners wages rose on average by just 0.7% while for higher earner’s salaries increased on average by 1.6%. The bottom 10% of earners are facing higher effective inflation rates of 4.1% compared to 3.3% for the richest earners.
Payday Loan Company Offers Business Loans
Payday lending company Wonga.com has caused a commotion by launching a service that offers short term loans to British businesses. The payday lender that charges 4,200% APR for its payday loans will now has now allowed UK businesses to borrow up to £10,000, and have it within 15 minutes.
In a time of second recession where an average of 70 UK businesses collapse every day, many firms will be tempted to take out a loan to save their company from bankruptcy in the short term. The interest rates are high but to many companies it is the only option available. A high risk business borrowing £7,500 for a year could pay an extra £7,800 in interest. Companies could be caught in a spiral of debt struggling to repay the loans but many will take the chance to save their businesses when the banks have turned their backs and looked the other way.
11,000 Households claim more than £47,000 Equivalent Wage in benefits
Over 11,000 UK households are claiming more than £34,000 a year, which is the equivalent of higher rate taxpayer’s earnings of £47,000.
This excessive figure was revealed by Iain Duncan, Work and Pensions secretary who revealed that letters are going to be sent to over 67,000 UK households this week explaining the details about a new benefits cap that is coming into place limiting their benefits.
The benefits cap which comes into effect in April 2013 will mean that nobody on benefits can claim more than £26,000 per year which is the average annual salary. The aim is to remove the disincentive to work shown by a lot of people can be far better off by not working.
The 11,000 households identified as living the life of luxury without having to work for it, enjoying benefits of over £34,000 a year, which is equal to a gross wage of £47,000. Mr Duncan Smith will be writing to these as part of the 67,000 people this week with the news that their benefits are to be capped.
Defaulting on Loan Repayments
If a borrower is having problems repaying their loan for any reason, the first thing they need to do is contact their lender. Sometimes things occur that are unplanned for and keeping the lines of communication open between the borrower and lender can smooth the bumps of a difficult time.
While a late payment can hurt the borrower’s credit, they should still alert their lender as to the reason why. Temporary set-backs happen to everyone. Most lenders are willing to accept a late payment and in order to give the borrower a hand; they may even waive any service charges or late fees.
If the setback is of a longer nature and the borrower and lender have remained in constant contact to work through the situation, the lender may be willing to work out a suitable arrangement for the borrower to pay back the loan. Keep in mind that in order to do this, there may be additional interest and fees attached to the original amount of the loan. The ability to pay it off a little at a time, though, will be better than the alternative of running up more fees than the borrower will be able to handle.
The Different Types of Loans
Depending on a borrower’s specific need determines what type of loan they should try to obtain. Loans range from personal to business to just about everything in between and knowing what some of the most common loans are available will help potential borrower’s make an informed decision about the type to choose. There are basically two types of loans, secured and unsecured.
Secured loans are any loans in which the borrower provides something they own, such as a car or property, as collateral on the loan. What this means is if the borrower defaults on the loan, the lender has the right to come and take the collateral away in exchange for payment. The length of the loan depends on the life of the collateral used to secure the loan.
Unemployment Could Keep Climbing Until 2016
Unemployment will keep climbing for at least another five years in most of the UK according to forecasts by the Centre for Economics and Business Research (CEBR). The prediction by the think-tank reflects what the CEBR calls a “generally weaker economic outlook for a longer period in the UK”.
The CEBR revised its previous unemployment predictions that it presented in October. It said that London, the East and South East of England could be the only areas to break the trend.
Rob Harbron, CEBR economist said that the new report predicted ‘five more years of pain’ for most of the country.” He also said that “Family budgets are being squeezed between the pressures of rising unemployment, low earnings growth and stubbornly high inflation.”
Prepaid Credit Cards – A Good Alternative
Prepaid credit cards are a good option if you need a credit card but have a bad credit rating that would hinder your ability to be approved for one. Prepaid credit cards are charged with cash, much like you put credit on an electricity card for example. These reusable payment cards work much like debit cards in the sense that you can only spend as much as the card is credited with, but does not require a bank account. There are a number of reasons why prepaid credit cards benefit anyone and everyone who uses them.
Prepaid credit cards can be a good way of providing your children with cash in a safe form, especially if they are going out with friends or on away on holiday.
Because you can only spend the amount that you have put onto the card, you can avoid falling into debt and receiving a getting a paid credit rating. Also, since you are not “borrowing” money from a anyone you will never incur financing fees, late charges, or over-the-limit fees that are all associated with traditional credit cards. There will never be a monthly bill to worry about if you do not have enough money left to pay the minimum balance due. You will only ever be able to spend as much as you preload the card with making it easy to maintain and a stress-free way to manage your money.
More Cash Machines have now 5 pound notes.
The amount of cash machines in the UK has grown my more than 10 times since 2010 following a campaign to increase the availability of the faithful fiver. Only 670 cash machines were dispensing £5 notes in 2009, that figure is now over 5000.
The Bank of England set a target for at least 1.2 per cent of dispensed bank notes to be £5 pound notes. The total of 1.5 per cent which equals almost £200 million worth of the notes is now dispensed every month. This year a total of £4 billion notes are hoped to enter circulation.
The Bank of England was very keen to get more of the notes into circulation to make more good quality notes available. The fiver has a bit of a reputation for often being old, worn and tatty.