UK banks are in the hole for £9 billion, payable to consumers that were mis-sold payment protection insurance (PPI). Six million people or more stand to benefit from this compensation. The banks have been in court embroiled in a legal battle over this issue for a while now, but as of May 2011 they decided that they weren’t going to win this one.

The reason why the banks were in court over this issue is because they created a bit of a mess for themselves by mis-selling PPI policies. PPI is a type of insurance that protects consumers from defaulting on an outstanding debt on a loan or overdraft and is typically sold as an add-on. PPI will protect a borrower if circumstances occur that prevent him from making money to pay back the debt. For example, if a borrower falls gravely ill and cannot work, PPI should kick in. With other types of insurance, it can be relatively easy to determine whether a consumer needs it or not, but with PPI it is a lot more difficult to determine this.

Many people who have PPI never asked for it and are not even aware that they have it. Records show that 72% of the adult population in the UK has PPI, but according to surveys 40% of them didn’t know they had PPI. The Financial Services Authority states that 95% of all claims upheld by the Financial Ombudsman Service were mis-sold to consumers, which translates to 70% of the entire adult UK population having been mis-sold PPI. Selling PPI makes a huge amount of money for bank, providers and third party brokers – and some aren’t above being somewhat deceptive to make a sale. Some banks and brokers instructed their agents to tell people that they would not be able to get credit if they did not have PPI, which is blatantly false. Others sold the policy to unsuspecting consumers and added the full cost of the policy up front, which consumers were then required to pay interest on.

People only really became aware of the PPI problem in 1998 when the consumer group Which? brought it to light. The Financial Services Authority got involved in 2005 and started fining lenders, but the problem still continued. Claims for mis-sold PPI are on the rise, with consumers initiating claims against the people who sold them the policies. The UK courts decided against the banks in April 2011, declaring that consumers were in the right and that banks needed to pay out these claims. Although consumers and consumer advocates are rejoicing over this legal victory, others are taking a more sober approach. They claim that the banks aren’t going to quietly take this loss and that consumers are going to bear the brunt of this payout when the banks raise their rates, give poor customer service or push up credit card or overdraft charges.

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I think the markets are different from Canada, the US, and South Africa but there was interesting article in the Times Live about car rentals pushing up the total car sales in South Africa.

Here is a quote:

Out of the 24,699 new cars sold in October 2010, the car rental sector accounted for 25 percent at 6207 new cars.

I think van rentals and other vehicles probably make up a lot of those sales as well.

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Regardless of the huge amount of money you are earning, without proper personal finance management, you will eventually lose all you have. It is very vital to ascertain the sources of money and the amount of money, which is coming in and how much money is being spent and on what heads. And individuals, who are looking forward to an early retirement, for them efficient management of personal finance is of utmost importance.

Managing personal finance is a very critical and crucial task and needs to be carried out consistently for financial stability over a long run. However, though it is a difficult task, but by adopting certain essential habits of managing personal finance, people can easily save few bucks by the end of the period in consideration. Regardless of the amount of money which is earned every month, it is very vital to manage the amount so that all the essential needs are fulfilled. It is not important to earn huge pay package, spend on high end luxuries and own expensive cars in order to become happy. These things are just methods of luxuries and there is no end to luxury. However, if individuals aim to live a comfortable life and well manage their personal finances they can easily lead a happy satisfied life.

Some quick tips to manage personal finance –

• The first essential step towards efficient management of personal finance is to keep proper track of day to day expenditure. By maintaining a regular record, you can check the various heads on which you are spending and to what kind of use is your money being used.
• The second step is to evade the use of credit cards. Credit cards are small devil cards, which compel you to initiate avoidable expenses. People should develop a habit to just use credit cards just for the sake of convenience and not to attain a lifestyle which is beyond affordability.
• The third effective step is to pay yourself before you discharge various expenses. This simply means that individuals should keep some amount of money aside as savings.

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303,824,640 is the total population

155,200,000 is the total labor force

$48,000 is the gross domestic product

20% of households have received practically all of the wage increases since 1975

$810 billion is the merchandise trade deficit

35.5% of Americans work in managerial, professional, and technical fields

24.8% of Americans work in sales and offices

22.6% of Americans work in manufacturing, extraction, transportation, and crafts

3.892 trillion kilo watt hours is the electricity consumption of the country

8.457 million barrels of oil are produced every day

20.68 million barrels of oil are consumed every day

$1.377 trillion is amount of exports per year

49.0% of this is in capital goods like transistors, aircraft, motor vehicle parts, computers, telecommunications equipment, etc.

21.4% is how much trading the US does with Canada, it’s largest trade partner

11.7% is how much trade the US does with Mexico

163.2 million is how many main telephone lines there are in the country

255 million is how many cell phones are in the country

14,947 is the number of airports in the US

4.06% of GDP is how much is spent on military expenditures

59,413,358 is the number of males age 16-49 fit for military service

59,187,183 is the number of females age 16-49 fit for military service

6,465,799 km is the total amount of roadways

2,255,964 km of which are unpaved

82.1% of the country speaks English

10.7% speak Spanish

51.3% consider themselves Protestant

23.9% would say they are Roman Catholic

67.1% of the country is between the ages of 15 and 64 years old

36.7 years is the median age

78.14 years is the total life expectancy in the US

81.13 years if you’re female

0.883% is the population growth rate

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I came across an interesting website today about a process in the United Kingdom called Individual Voluntary Arrangements. They’re a debt solution and from what I can tell there isn’t really anything like it in Canada.

If you get a chance check it out the site. A few of the good bits are as follows:

What is an IVA? – explains the process.

Letter of full and final settlement sample – something to send to your creditors if you’re in debt.

How to negotiate an IVA - as it sounds.

I’ll try updating more often with website of interest like this in the coming days. Hope everyone is doing well!

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That’s what the Montreal Gazette is saying today.

Apparently a new survey done this year shows that 1 in 5 Canadian homebuyers feel ok with their current debt levels – but another increase in interest rates could make things tough for a lot of Canadians.

The Canada Mortgage and Housing Corporation ended up surveying over 2,500 people about things relating to Canada home mortgage levels. These surveys were done before three consecutive hikes in interest rates. Interest rates went from around 5.2 – 6.2 % in less than a month.

That’s a pretty quick increase. I guess we’ll see how things go from here.

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If you’re one of our regular readers you’ve probably noticed that we’ve gotten a new look. We couldn’t be more excited about it as it’s going to be so much easier to navigate and find all those important tips and information you’ve come to expect from this site.

We can’t help but feel so thankful for all the hard work by our web designer John Hendricks. Thanks again John for being so patient with us as we upgraded this site, we really appreciate all your hard work and couldn’t be happier with the way the site turned out.

web design

We contributed an article to a great website called Help with Debt Now. The post is called, “7 Strange Ways to Save Money” and it can be found here. Have a look at the site if you get a chance.

There is information about credit cards, general money topics, family life, debt consolidation, bankruptcy, personal finance, mortgages, and savings. If you get a chance head over there today.

debt help · helpful sites · saving money

The short answer is yes – cancelling a credit card can have a negative effect on your credit score.  Let us look into why this can happen.  Then we will explore reasons why you still might want to close that credit card account.

Erasing Good History

If you close a credit card account, even if you have found an alternative best credit card deal, any good history associated with the old card is kept on your credit report for ten years.  If you did not cancel the credit card, then the account history stays on for twenty years on your credit report.  Notice that if you had any bad credit history, it stays on your report, even if you do cancel the credit card.  Therefore, this scenario does not work both ways.

Cutting Down Your Debt to Credit Ratio

Another way that closing a credit card account can have a negative effect on your credit score is when you have a zero balance on the credit card.  What this can do is reduce your debt to credit ratio by whatever you could have charged to that credit card.  This is a simple fractions problem.

Are there any reasons why you should close a credit card?

Without a doubt, closing a credit card will lower your credit score.  This may not be reason enough to keep an inactive credit card account open.  Here are some good reasons for closing a credit card.

For most people wanting to curtail their credit card usage, freezing the cards in water or cutting them up is usually enough.  Nevertheless, for those who truly have a hard time not charging more than they can pay, closing a credit card can help.  Before closing a credit card, consider calling the company and asking them to reduce the maximum limit on the card. They do not want to lose you as a customer.  If you tell them you are considering closing the account, they may work with you, and offer you a better credit card deal.

Another reason to close a credit card is if you have one that actually charges you an annual fee.  Call the credit card company to see if you can get them to stop the annual fee.  Otherwise, it is not worth it to continue to pay an annual fee for a credit card if you do not use it.

Another reason people like to close inactive credit cards is to minimize the amount of overhead involved with managing your credit cards.  Consider for example the problem of identity theft or if somebody were to steal your wallet or purse.  One less credit card account means one less credit card account information you have to maintain or protect from the wrong people.

cancelling credit cards · credit cards · credit score · debt counselling

The Canadian home resale numbers fell around 1.5 percent to 42,799 units last month which becomes the second straight decline. This is coming via an article from Business Week. The original data came from the Canadian Real Estate Association (CREA).

The biggested drop was in Vancouver. Surprise, surprise. I guess that’s what happens when your entire city is paying attention to one of the world’s largest sporting celebration (hint: the Olympics).

The CREA The average resale price rose 18 percent from a year ago to C$335,655 ($329,330).

Yikes, that’s going to add up.

“Housing markets are becoming more balanced,”  said CREA’s Chief Economist. The release went on to say “Further expected supply increases will continue to take the steam out of housing markets as the year progresses.”

The last few months have shown Canada’s mortgage and remortgage rates are getting ever more close to the lowest since the Korean War. This has increased home sales and prices as the country emerges from a recession. We’re doing quite well compared to some countries in fact. We shall see how things look going forward.

Canada Mortgage Rates · interest rate · Resales in Canada