|
|
|
Annual Credit Report and Free Annual Credit Report
Getting an annual credit report review has been the advice of many financial managers as they guided their customers to be aware of all information on credit reports. Would the idea of a free annual credit report be good news? Consumers are...
Credit Card Debt Reduction - 3 Tips To Lowering Credit Card Debt
Credit card debt can be reduced through lower rates or
negotiating for reduced balances. With reduced interest, you can
pay off the principal quicker with the same monthly payment. The
other approach is debt settlement, which eliminates part of...
Effectively Managing Your Credit Card Debt
Credit cards can be a plus in emergencies and great to use to
build your credit but when using them gets out of hand you could
find yourself dodging collections agencies and even going to
court to settle your debts. One way to avoid all this...
Need Extra Money? - Refinance or Equity Line of Credit, Which is Right for You?
You may be looking for some extra money to fix up the house, go on a vacation or buy a new car, and you want to take some equity from your home to do it. To do this you could either refinance your home and take some of your equity or apply for an...
What is an Airline Credit Card???
One of the perks associated with today's credit cards is the frequent flier program. In order to determine which program is best for you, you should consider whether you will be able to obtain benefits from the dominant airlines in your region. You...
|
|
| |
|
|
|
|
|
|
Rate tarts no longer welcomed by mortgage and credit card providers.
Following on from recent moves in the credit card industry (see Cashzilla, “Rate tarts losing ability to cherry pick” ) to reduce the number of people switching from one financial provider to another, mortgage lenders are now looking to follow suit.
Abbey is the latest High Street mortgage lender to notify its customers that they are increasing the costs associated with switching from their mortgage to £225, this fee is over and above any other penalties levied for leaving early, and represents an increase of 25%. Abbey is however only the most recent in a list of 53 mortgage providers announcing similar steps within the last year.
Michael Coogan, Director General of the Council of Mortgage Lenders, said, "All lenders are having to look at their fees much more closely now". The recent financial reviews were attributed to the slowing of the housing market whilst administration costs have continued to rise, however David Hollingworth of mortgage brokers L&C agreed with the BBC that lenders were imposing the charge to discourage people from moving.
The Financial Services Authority advises caution when looking at the possibility of changing lenders. “Switching can cut your monthly payments. But you’ll need to weigh up these monthly savings or other benefits against the up-front costs of making the switch.”
The growth in the number of consumers switching their financial providers has occurred due to the recent growth in the number of finance assessment tables in newspapers, and financial comparison websites such as Moneynet which have been launched to help consumers to get the best rates available.
The ease with which consumers can compare the various rates and offers that are available has meant that financial product providers have fought to attract new financially mobile members from other providers, through special offers and limited term deals. By making use of these deals the financially mobile ‘Rate Tarts’ have been able to wipe thousands of pounds off their mortgage repayments, and some have even turned profits by regularly switching credit cards.
The main strategy that has been adopted by the credit card companies such as Egg, Barclaycard, MBNA, Alliance & Leicester, Tesco and Mint, to prevent rate tarts, is the introduction of about a 2% transfer fee on all balances between cards. Card holders will then usually benefit from an introductory period of up to 9 months at a rate of 0% interest being charged over the deal period.
Although
the moves are designed to stop the actions of rate tarts eating into lenders profits, many experts still say that while there are more obstacles, and the benefits of switching have been reduced compared to past levels, borrowers can still save money by judiciously changing between lenders.
Savings Director for Chase de Vere, Sue Hannums, believes that, "Even with these new charges, those with outstanding debts on their credit card should still look to move to a cheaper deal. If they can switch from one introductory offer to the next they should make substantial savings over the long term."
Financial Director Stuart Glendenning states that consumers are saving about £1 billion a year by taking advantage of interest-free periods; however he suspects that, “Most banks are now working on a way to discourage rate tarts. This will probably come in the form of more widespread and more expensive transfer fees, particularly for longer interest free offers."
Martin Lewis, of moneysavingexpert.com, advises: "You must be vigilant and be prepared to transfer again and again if you want to make the savings. After a six-month interest free period, you only have to pay interest charges at the standard rate for two months to lose all of the benefits. And even if you forget to move from that card just one day after the free period expires, you will pay an entire month's worth of interest for that simple mistake."
For mortgage borrowers, the introduction of penalty fees does seem particularly harsh, as David Hollingworth of mortgage brokers L&C points out, "Most people's gripe here is not that there is a fee, but more about the increasing of that fee over the term of the mortgage, so when you are taking a deal out it can be one figure, when you come to actually switch, then you are looking at a very different figure." But the lenders view it as more of an effort to recover fees directly from the customers who are causing them additional costs, rather than including these costs into their overall interest rates thereby making everyone pay.
It seems that the financial industries love affair with attracting customers from competitors has finally ended. Whilst there are still many lenders willing to provide offers to attract customers, there are also many lenders now looking to make rate tarts an endangered species.
About the Author
Richard lives in Edinburgh working for bigmouthmedia, occasionally writing for the personal finance blog Cashzilla, and considering the possibility of there being intelligent life on Earth.
|
|
|
|
|
| Credit Reports - Credit Cards - Car Loans - Home Loans - Credit.com |
| Credit.com offers a variety of credit related products and services including credit reports and credit scores, credit cards, car loans, home loan and ... |
| www.credit.com |
|
| Equifax Personal Solutions: Credit Reports, Credit Scores ... |
| National consumer credit reporting company that offers credit reports, FICO(R) credit scores and identity theft protection products to consumers and small ... |
| www.equifax.com |
|
| The FTC's web site on Credit |
| Credit is much more than a piece of plastic, and the resources on this site can help you become a more savvy consumer. You’ll also find compliance ... |
| www.ftc.gov |
|
| Federal Trade Commission - Consumer Credit Center |
| Features an assortment of helpful articles related to credit issues. |
| www.ftc.gov |
|
| AnnualCreditReport |
| Site set up by the big three credit reporting agencies in the United States, to furnish free annual credit reports, as required by federal law. |
| www.annualcreditreport.com |
|
| Springboard - Non-Profit Consumer Credit Management |
| Our mission is simple: To offer education on the wise use of credit. ... SPRINGBOARD has been approved to provide credit counseling services and issue ... |
| www.credit.org |
|
| myFICO - FICO Credit Scores, Online Credit Reports and Identity ... |
| myFICO.com: Get your Free credit report and Free credit score with a 30-day trial of Score Watch. All three FICO Scores and Credit Reports Available now ... |
| www.myfico.com |
|
| Credit Suisse Global |
| Credit Suisse Group is an international financial services group. - Shares part of SMI. |
| www.credit-suisse.com |
|
| Experian: Free Credit Report and Credit Score, Credit Check ... |
| Credit referencing and consumer targeting for the USA and other countries. |
| www.experian.com |
|
| National Credit Union Administration - Home Page |
| An independent federal agency that supervises and insures 7152 federal credit unions and insures 4240 state-chartered credit unions. |
| www.ncua.gov |
|
| Credit - Wikipedia, the free encyclopedia |
| Debits and Credits, a type of bookkeeping entry; Credit (creative arts), acknowledging the ideas or ... Retrieved from "http://en.wikipedia.org/wiki/Credit" ... |
| en.wikipedia.org |
|
| Credit (finance) - Wikipedia, the free encyclopedia |
| Any movement of financial capital is normally quite dependent on credit, ... Sometimes if a person has financial instability or difficulty, credit is not ... |
| en.wikipedia.org |
|
| The National Foundation for Credit Counseling |
| DebtAdvice.org is a service provided by the Members of the National Foundation for Credit Counseling (NFCC), most of them known as Consumer Credit ... |
| www.nfcc.org |
|
| FreeCreditReport.com | Free Credit Report and Credit Score Online ... |
| FreeCreditReport.com: Free credit reports and credit scores from Experian. Get your free credit report and credit score now. It's free, fast, and easy! |
| www.freecreditreport.com |
|
| Compare credit cards | apply for a credit card | 0% balance ... |
| Compare over 300 credit cards, including 0% offers and balance transfers, and make a credit card application online... |
| www.moneysupermarket.com |
|
| Ford Credit - Auto financing for Ford, Lincoln and Mercury cars ... |
| Ford Credit provides auto financing to finance a lease or purchase a car or truck through Ford, Lincoln or Mercury dealerships. |
| www.fordcredit.com |
|
| The Credit Card Prank |
| In my lifetime, I have made nearly 15000 credit card transactions. ... Credit card signatures are a useless mechanism designed to make you feel safe, ... |
| www.zug.com |
|
| Credit magazine, corporate bonds, derivatives, structured credit ... |
| Credit magazine provides information on the international credit markets for credit investors, issuers and market professionals. |
| www.creditmag.com |
|
| CUNA: The Credit Union National Association |
| News and resource directory about credit unions. |
| www.cuna.org |
|
| Credit/Debt Management - Tools and Advice for Managing Credit and Debt |
| Drowning in debt? Trying to improve your credit score? This is the place for you. Get real world information and tips, as well as the legal low down, ... |
| credit.about.com |
|
|