The Financial Blog

The case management conference has predictably resulted in the banks being given leave to appeal against the recent High Court judgement.

The banks are appealing against the original ruling that unauthorised overdraft charges are assessable for fairness.

David Black, Principal Consultant of Banking for Defaqto says: “The stakes for both sides are extremely high so this has all the hallmarks of being a very lengthy judicial process. Next step is the Court of Appeal and after that the House of Lords and maybe even Europe.”

“If the original judgement is ultimately upheld and a substantive hearing rules that the charges are unfairly high the most likely outcome is that a cap will be placed on the charges but, crucially, the banks will still be entitled to make an element of profit in the fees charged.”

“Whilst it will clearly depend on the level of cap enforced it will almost certainly result in the current account landscape being changed significantly as the banks seek to make up any lost revenue in other ways. Limited facility basic bank accounts, which do not have overdraft facilities, will almost certainly remain free but it looks increasingly likely that charges will eventually be introduced for full service current account customers. These may take the form of either pay per transaction or a flat fee with or without discounts for taking other products from the bank or maintaining a specified minimum balance.”

“Short term I also expect to see more aggressive marketing of added value accounts.”

A moneysupermarket.com survey reveals that over 66 per cent of Brits say they won’t be able to cope if fuel prices keep rising.

Surely it’s time for the government to step in and stop ignoring the unbelievable price rises we’ve seen over the last 12 months?

The Government is already making an additional £110 million from fuel duty this bank holiday Monday - http://www.thefinancialblog.co.uk/petrol-price-increases-will-cost-110-million-extra-this-bank-holiday/

With the price of oil hitting record levels, petrol prices exceeding £1.10 per litre and gas and electricity prices up by 15 per cent, a Moneysupermarket.com poll shows two thirds of Brits fear they won’t be able to cope if fuel prices continue to rise.

• 66.9 per cent of people who took part in the pole agreed with the statement ‘very concerned – If fuel/energy prices continue to rise I won’t be able to cope.’
• 29.2 per cent of people agreed with the statement ‘Concerned – I’m a little worried that I may not cope if prices rise.’
• 3.4 per cent of people agreed with the statement ‘Unconcerned – I’d rather prices didn’t rise but I’ll be comfortable regardless.’
• 0.6 per cent of people agreed with the statement ‘I don’t care – Fuel/energy prices don’t concern me at all.’

Head of debt at moneysupermarket.com, Tim Moss, said: “Brits are being stretched to breaking point as our poll of moneysupermarket.com users shows.”

“Rising fuel prices are a massive issue right now, in much the same way as they were during the fuel protests of eight years ago. Leading economists have been telling the Government it can afford to drop the price of petrol by nine pence per litre without having any effect on its bottom line. People are really starting to suffer and need help urgently.”

“We are powerless to control the amount of tax the Government reaps from petrol, so people who are struggling need to focus on the things they can control. People should start by gathering their paperwork and working out the true scale of their problems. From there they must prioritise bills and pay the essentials such as mortgages or rent and utility bills first. Non-essential items such as magazine subscriptions and pay-TV might have to be sacrificed.”

“If you feel unable to sort out your money worries yourself, start by getting some free independent advice from organisations such as the Citizens Advice Bureau or the Consumer Credit Counselling Service.”

Make sure you are getting the most out of your personal finances Compare savings accounts and get the best rates, transfer any credit card balances to a 0 per cent credit card asap and if you need a loan then compare loan rates to get the cheapest deals.

But if you’re struggling to keep up with repayments on a loan or credit card then you should seek professional financial advice, applying for additional credit is not the way to solve financial difficulties.

I remember writing this post a few months back and thinking that petrol prices would never really get anywhere near £1.50 a litre, but now I’m not so sure;

http://www.thefinancialblog.co.uk/petrol-to-hit-150-a-litre-this-year

The AA say that the average bank holiday car journey looks set to cost UK drivers a whopping £110 million more this year compared to last year because of rising petrol prices. (Don’t get me started!).

The average journey is estimated at 304 miles and drivers using diesel cars will see an increase of 29 per cent and unleaded petrol car drivers will see a 17 per cent increase. It’s no suprise the government refuse to budge over fuel duty don’t forget they’re getting around 75% of the £110 million and it’s all MORE, i.e. additional fuel duty revenue than this time last year. I guess we have to pay for those MP’s expenses some how…

Getting back on track! - Despite the rising costs the AA estimate that there will be a 33 per cent increase in road traffic tomorrow and so they have put together some travelling tips for this weekends bank holiday traffic;

Timings

• The 33% increase in traffic on Friday is likely to result in an average 30 minute delay, not allowing for any significant traffic incidents
• Traffic levels are expected to increase from mid morning on Friday 23rd, peak at 5pm and are likely to subside by 7.30pm
• Saturday and Sunday traffic is expected to be weather dependent, with any outbreaks of good weather making approaches to local places of interest busy
• Monday evening will see an increase in traffic as people travel back home

Top ten busiest roads

• M25 around London through Surrey and Berkshire (J10-J16)
• M25 South Mimms towards the Holmesdale Tunnel (J23-J27)
• M25 from Kent towards the Dartford Tunnel (J4-J1)
• M1 Northbound past Luton (J6-J10)
• M1 through the East Midlands towards South Yorkshire (J22-J32)
• M6 through the West Midlands (J6-J11a)
• M6 between Cheshire and the Lake District (J21-J35)
• M5 Southbound past Bristol (J15-J20)
• M5 through Somerset and Devon (J23-J29)
• A303 between Stonehenge and Somerset/Devon border

Top 10 destinations for May Bank Holiday weekend:

1. London
2. Manchester
3. Cardiff
4. Bristol
5. Southampton
6. Nottingham
7. Brighton
8. Blackpool
9. Birmingham
10. Edinburgh

One thing you can do when it comes to the cost of running your car is make sure you compare car insurance and get the most competitive car insurance policy for your needs.

According to Defaqto, and independent financial research company, Tescocompare.com is still the best car insurance comparison web site. Defaqto analyised 41 motor insurance comparison sites for functionality and usability features and it found that Tescocompare.com scored 77 per cent this time around. This follows Defaqto’s previous analysis in October 2007.

Managing Director at Tescocompare.com, Peter Dingle, commented: “Once again Tescocompare.com has come out on top and this time Defaqto compared more than twice the number of comparison sites. It is fantastic that our proposition has achieved independent recognition of leading the way forward for insurance comparison sites, especially in light of the recent FSA announcement. Tescocompare.com strongly focuses on giving consumers easy to use information to allow them to compare not just the price of a policy, but also the product features, to ensure they are getting the right cover for their needs.”

“Our customers also benefit from the fact that the price they are quoted on our site is the same if not cheaper than if they went to the insurer directly. We do not believe in making assumptions on behalf of our customers and hence the premium quoted will be the final price they end up paying for the selected policy.”

“We are delighted that Defaqto has recognised our work to put the consumer first. We will continue to work on our proposition to make sure our customers can make an informed decision on the cover they are purchasing.”

Everyone will have their preferred comparison web site but I think that you’d be stupid not to take half an hour, or an hour, out of your day to try a few of the car insurance comparison web sites and make a note of which insurers and prices you get back. Then you’ll really know which offers the cheapest car insurance for your needs.

>>Click here to compare car insurance policies today!

I didn’t realise this but Moneyexpert.com has obviously looked at the small print when it comes to current accounts. They say that high interest current accounts pay, on average, just 0.58 per cent for amounts over £2,500.

The high interest current account is a fairly new phenomenon, I’m sure you’ve seen the Halifax adverts which say ‘50 times more interest than Barclays, HSBC‘? Infact the main home page of the halifax.co.uk web site is advertising this right now.

Well, Moneyexpert.com say that only one of these current accounts maintains the headline interest rate above a £2,500 balance, which is Coventry’s First Account, offering 6 per cent, up to a maximum of £250,000.

If you have an Alliance and Leicester Premier Direct Account offering 8.18 per cent, an HSBC Bank Account Plus offering 7.72 per cent, or a Halifax High Interest Current Account offering 6 per cent, then I’m afraid that once your balance is around £2,000 or more then these headline high interest rates will not apply.

Moneyexpert.com say that there are a few other bank accounts paying a consistently high rate of interest, these are; Cahoot paying 3.65 per cent up to £249,999, and Yorkshire Bank’s Current Account Tracker paying 4 per cent (But this is only available to customers with an income of £75,000 or more - so that rules out the average person!).

Founder of MoneyExpert.com, Sean Gardner, said: “High interest accounts are a great addition to the market particularly for those with modest balances looking to make their cash work harder.”

“But customers need to remember that the tempting high rates are only effective for sums up to a point, normally around £2,500. If you’re keeping any more than that in your current account then you should look elsewhere. ”

“Apart from the potential exception of the Coventry, cahoot and Yorkshire accounts those looking for a substantial return on their cash are likely to be better off investing surplus funds in an ISA or savings account rather than letting it sit gathering dust”.

>>Click here to compare ISAs

>>Click here to compare savings accounts and find the best long term rates

According to the latest Council of Mortgage Lenders (CML) report, Gross mortgage lending hit £25.3 billion in April which is a 5 per cent increase on March but an 8 per cent decline when compared to April 2007.

The combined March and April figures for this year are 16 per cent down on the same 2 months in 2007 and the CML has also today published an update on it’s housing market forecasts for 2008, and here are the main points;

• House prices to be around 7% lower at the end of the year than at the end of 2007;
• Property transactions in England and Wales to be around 35% lower than last year at 770,000;
• Gross lending to be around 21% lower than last year at £285 billion;
• Net lending to be half last year’s level at £55 billion; and
• Bank base rate to end the year at 4.75%.

So this isn’t really the ‘end of the world’ doom and gloom predictions we’ve seen in the media recently. Yes there has been a sudden slump in the housing and mortgage market becuase of the US credit crunch but perhaps now house prices will not rise at the extraordinary rate we’ve been used to for the best part of the last decade.

As for mortgages and borrowing, I think the credit crunch has served as a massive warning sign to people in the UK when it comes to managing personal finances, including your mortgage. People cannot continue along the ‘borrowing from peter to pay paul’ route. If they do lenders will simply refuse to lend to them, wether that is a mortgage, a loan or a credit card.

Tightening lending criteria by lenders is a good thing because it will stop the people who should not get credit, or additional credit, from getting it! Something that perhaps the banks should have thought about a bit more over the last decade.

Director general of the CML, Michael Coogan, said: “In the wake of the credit crunch, 2008 will be remembered as a very weak year in the housing market. But our forecasts assume some indirect benefits from the Bank of England special liquidity scheme beginning to have an effect in the mortgage market in the later part of the year. Over the next few months, lending volumes will get worse before they get better. The market is still very uncertain, but lenders are working hard to ensure that borrowers coming off fixed rates remain on track, that arrears and repossessions are minimised, and that pricing is as attractive as they can make it in a market where they must manage the demand for lending with caution.”

>>Click here to compare mortgage rates and find the best deals

American Express is launching a new travel rewards credit card from tomorrow 22nd May 2008. The Blue Sky Card offers 1 point for every £1 you spend on the card.

The points can be used for any travel related purchase like flights, hotels, car rental, train travel, package holidays and cruise packages. If you earn 4000 points you’ll be given a £50 saving on any travel related purchase which equates to 1.25 per cent cashback.

Some of the benefits with this offer is that there are no limits on;

• The number of points that can be earned
• The length of time the points are valid
• The type of travel available for Cardmembers to redeem their points

The Blue Sky card also provides the following protection;

• Up to £200 for lost luggage
• Up to £100 for flight delays
• Up to £500 for missed flights (owing to public transport delays, accidents, transport cancellations, or car breakdown) or cancelled flights

There is no annual fee and 0 per cent on purchases for the first 6 months. Standard APR is 17.9 per cent Typical APR.

Vice President of UK Credit Cards for American Express, Tom Allder, said: “Our strategy is to reward Cardmembers on an on-going basis for their spending with us. We are continually looking for innovative ways to reward our Cardmembers.”

“We are expecting this Card to appeal to leisure travellers, who are not only looking to get best value for their travel expenditure but also want added safeguards to ensure their journey is a smooth one.”

“In today’s economic climate, people should be looking to make their plastic work for them.  With no restrictions on the choice of travel rewards, or the number of points that can be earned, we believe this credit card will be a compelling proposition for today’s travellers.”

I suppose this is a good credit card if you do a lot of travelling but to be honest there are better cards around and much lower interest rates on offer, 17.9 per cent Typical APR isn’t exactly cheap these days. Unless the travel reward points are of real use to you, personally, I wouldn’t bother with this credit card.

As a quick comparison I’ve just visited Moneysupermarket.com and found these credit cards on their credit card homepage;

Low Standard Rate Credit Cards

Barclaycard Low Rate Special - 8.8 per cent Typical APR - 56 days interest free period. >>Proceed

Capital One Platinum - 9.9 per cent Typical APR - 56 days interest free period. >>Proceed

0 per cent purchase credit cards

Halifax One Online Special - 0 per cent for 10 months - 15.9 per cent Typical APR. >>Proceed

Capital One Platinum - 0 per cent until 01/03/2009 - 9.9 per cent Typical APR. >>Proceed

So you can see from just these 4 examples above there are cheaper credit card deals to be found if you do a bit of simple research. >>Click here to compare credit cards now!

According to Moneysupermarket.com Kwik-fit and Swiftcover.com offer the most consistently competitive car insurance on Moneysupermarket.com

Moneysupermarket.com analyised 12 million quotes from their car insurance channel from the last 12 months and found that Kwik-Fit and Swiftcover consistently provide the cheapest car insurance premiums for all drivers, averaging £277.

Head of insurance research at moneysupermarket.com, Peter Gerrard, said: “It is great to see Kwik-Fit joining Swiftcover as the insurer offering the most consistent competitive value over the past year. Swiftcover is recognised for offering value-for-money motor insurance and increased competition can only be good news for motorists facing rising petrol prices.

“We continue to see smaller online insurers being very nimble on price due to their lower overheads. However, some of the big names, such as Admiral and RAC, are committed to offering consistent good value, even though they weren’t quite able to pip Kwik-Fit and Swiftcover to top spot.

“While cost is a major factor, motorists should make sure they get cover most suited to their needs. It is always worth looking at multiple-person cover, excess levels and motor breakdown cover within insurance deals.

“Drivers shouldn’t be hasty when renewing policies. Some insurers include discounts on the first year of a policy to entice motorists, hoping they will stay with them when the first year comes to an end. There is nothing stopping drivers from changing their insurer each year and always taking advantage of the most competitive premium. There is no substitute for spending a few minutes comparing quotes online and finding the best deal for your needs.”

>>Click here to compare car insurance quotes online and find the best deal for your needs!

Abbey.com is one of the first banks to stand out from the crowd make a change to their credit card fees. Abbey’s zero credit card is the only credit card with no fees on balance transfers, foreign exchange or cash advances. This is a very welcome change to the norm!

When travelling abroad most credit card companies will charge you anthing from 2 to 3 per cent if you use your card. The average foreign exchange fee of all credit cards is 2.69 per cent.

The Abbey zero card doesn’t charge a fee for use abroad and offers an introductory 6 month interest free period on balance transfers and purchases - perhaps this is the most important part of the Abbey offer, there is no balance transfer fee.

This is the first time in around the last 12 to 18 months that I’ve seen a credit card offering 0 per cent on balance transfers with no balance transfer fee. OK the balance transfer period isn’t the best at 6 months but I think that a lot of people will consider this credit card just becasuse they will not have to pay a fee to Abbey so that they can transfer their existing credit card balances.

The other points to consider are the rather high Typical APRs;

• 18.9 per cent APR on all balance transfers and purchases (after the introductory 6 months interest free period)
• 25.9 per cent APR on cash advances (calculated from the day of withdrawal)
• Fees for late payments, exceeding the credit limit, returned cheques and returned direct debits will still apply and are £12.

To take advantage of this credit card you’d have to make sure that you only transfer a balance and try to pay off as much of that balance as possible within the 6 month 0 per cent offer period. Whatever you do, do not make any new purchases with this credit card unless you can repay the balance straight away.

>>Click here to compare credit cards now!

Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said:

“This is welcome news in an otherwise hostile market place. First Direct’s original stance - made at the start of April - was reflective of a cautious attitude towards the market as a whole. The reversal of the decision demonstrates a growing confidence in the market.

“The news that First Direct is reopening its doors comes hot on the heels of Abbey and Nationwide cutting mortgage rates last week and HSBC extending its rate matcher offer. The clouds over the mortgage market are starting to clear, much to the relief of borrowers across the country.

“First Direct always maintained not lending to non-customers was only a temporary measure to control the volume of applications it was processing, and it seems it has been true to its word. I hope other lenders follow First Direct’s lead and start welcoming customers through their doors again.”

Click here to compare mortgages and find the best deals