Brit tourists pay big for cash withdrawals

By UK CreditCards.com

Holidaymakers from Britain were charged a total of £106m on credit card cash withdrawals in Europe last month.

That is according to analysis by London newspaper the Evening Standard, which said that Britons paid around £50 per €1,000 they took out from foreign cash machines.

Representing a 6% charge per transaction, these fees are passed on to cardholders in the form of commission and withdrawal costs.

The Evening Standard was quick to point out that prepaid credit cards are increasingly being used as an alternative to traditional credit cards abroad, as they are less reliant on exchange rates. Sterling has been weakening against the dollar and the euro for months, with declines gathering pace as economic conditions deteriorate.

"Holidaymakers trying to save cash are increasingly buying money before they travel or loading prepaid currency cards, which offer better exchange rates and lower or no usage charges," the publication explained.

"The drive for a good deal has become even more important as exchange rates are poor and the pound buys fewer euros."

Debt calls rise 27% from prior year

More citizens calling asking for financial advice, complaints

By UK CreditCards.com

Debt inquiries relating to credit cards and loans are on the increase in the UK, new figures from Citizens Advice indicate.

The nonprofit revealed that just over 560,000 issues relating to financial problems had been raised by members of the public in England and Wales between April and June 2009. This is a rise of 27% from the total measured over the same period last year.

Recession conditions in the economy have led to unemployment hitting a decade-long high in the UK, restricting the ability of some credit card customers to meet their payments.

Loans are also under pressure, with figures from the Council of Mortgage Lenders predicting repossession numbers to rise from 40,000 in 2008 to 65,000 in 2009.

Commenting on the new data, which was released to mark the 70th anniversary of the service, Citizens Advice chief executive David Harker said: "From rationing to recession, [we have] been there for people in times of crisis. As we celebrate our 70th birthday, our new figures show that what started out as an emergency service in wartime is now needed more than ever."

Citizens Advice also said that redundancy-related enquiries were up by 74% year on year, while jobseekers' allowance enquiries had risen by 99%.

UK credit card laws likely to change

Change could come as a result of new U.S. card laws

By UK CreditCards.com

Legislation on credit cards in the UK could soon be changed, reflecting the new US Credit Card Accountability Responsibility and Disclosure Act (CARD Act).

This is the view of Auriemma Consulting Group, which pointed out that reforms to consumer lending regulations in America are commonly reflected across the Atlantic within three years.

The CARD Act, signed by president Barack Obama this summer, imposes new controls on credit card lenders in order to promote responsible borrowing.

Auremmia Consulting said that, due in part to the severity of the present financial downturn, similar laws could be adopted in the UK as soon as the end of 2010.

The report also predicted the widespread changes that could come to the market as a consequence of the legislation, including the dying-out of bonus offers for new card customers. By contrast, card products offering fixed annual rates are expected to become more numerous.

Matt Simester, director of Auremmia Consulting, also expressed concern that higher-risk credit card applicants could be rejected in greater numbers in future, leading them to turn to unregulated lenders such as loan sharks.

"For many consumers, a credit card -- even one with a higher rate -- is the only legitimate borrowing channel accessible to them," he added.

Britons' debt load shows £3.4bn rise

The average amount owed by every UK adult is £30,188

By UK CreditCards.com

New statistics showing the extent of the nation's debts have been compiled by financial charity Credit Action.

According to the data, the total amount owed by Britons stood at £1.46tn at the end of July, a £3.4bn rise over the past 12 months.

This represents a dramatic slowdown in the rate of increase and reflects the tighter credit conditions imposed by banks due to the financial crisis and economic downturn of the past two years. By way of comparison, £116bn had been added to the national personal debt over the 12 months to January 2008.

Average unsecured debts, including money owed on personal loans and credit cards, stood at £9,226 per household in July 2009, according to Credit Action.

Including mortgages, the average amount owed by every UK adult stood at £30,188, equivalent to 130% of average annual earnings.

Meanwhile, over £65bn of interest repayments were found to have been made by Britons over the 12 months to July.

Statistics released by the Bank of England were used by Credit Action for its report.

Strapped UK consumers turn to loan sharks

Tight credit conditions force some to alternative lending

By UK CreditCards.com

UK consumers who are being turned down by high street lenders in the recession are using other sources of credit, it has been revealed.

Many customers looking for a way of servicing existing loan and credit card debts are turning to unregulated "loan sharks" who offer high-interest short-term credit, the Wall Street Journal reported.

Case studies from borrowers show that they are sometimes charged APRs of over 1,000%, and can be subjected to threats of violence from the lender if they cannot make repayments. The popularity of sharks was found to have increased as a result of the stringent criteria currently being imposed on customers by high street banks and regulated subprime credit providers.

In turn, this has been caused by financial firms looking to protect their own balance sheets in the global financial crisis and economic downturn by turning away the "risky" customers they previously welcomed.

These international trends have had a particularly marked effect on the UK, where residents have some of the highest debt levels in the world. Data from Credit Action shows that the UK's total personal debt stands at almost £1.5tr. This equates to roughly £60,000 owed per household, including mortgage debts.

OECD data also suggests that the typical Briton has a debt-to-income ratio of 180%.

Speaking to the newspaper, Alan Evans at the South West Illegal Lending Team, a government-backed loan shark specialist, added: "We are seeing a massive increase in people coming forward" with problems.