Here at Cashzilla Castle we like to keep our fingers on the financial pulse, so here is a selection of the top stories from around the internet…

Banks

Lloyds Banking Group has made a loss of £3.5bn after earmarking £3.2bn to cover compensation claims from mis-sold payment protection insurance. It’s hard to mention the word ‘banker’ these days without ‘bonus’ tagged on.

However according to the BBC:

“Lloyds said its bonus pool for 2011 was £375m, down 30% against 2010… Earlier this week the bank, which also owns TSB and Halifax Bank of Scotland, announced it would not be paying £2m of the pre-announced bonuses to 13 executives.”

Payday loans

Okay, so most of us have been strugging financially one way or another over the last four years of the world economic crisis. Personal debt is a nightmare, and you can’t always wait til payday to settle your debts. How many of you have thought about that payday loan?

Well, the Office of Fair Trade has launched an investigation into the £1bn industry, which hands-out loans to people who will be unable to repay them.

The Daily Mail has latched onto this one:

“The watchdog will look at claims the firms that are actively encouraging people to roll up loans, generating punishing interest charges and fees… The short-term loans have become incredibly easy to take-out, with some firms even arranging to dish out credit via mobile phone text message.
Some of the payday loans have a nominal APR interest rate of as much as 3,000 per cent.”

Tax evasion

Nobody likes to pay tax, who does? If you’re a tax dodger, beware. HMRC is creating 30 dedicated task force to scoop-up all of your unpaid taxes.
Mike Down at Baker Tilly told The Telegraph:

“HMRC expects to collect over £50m as a result of 12 task forces launched in 2011/12 and anticipate that, with 13 criminal investigations under way, this figure is set to rise.”
“HMRC will also extend some of the task forces from 2011 to different locations, including the scrap metal task force launched in Scotland in November.”

These are some of the stories that stuck out in my mind. Say “bankers bonuses” at the dinner table and your mum will send you to bed without any pudding; that aside many of the banks that have in the last few days reported losses, a good chunk of that is for payment protection claims. That’s not a terrible thing, is it?

I don’t think anybody will be sad to hear about the payday loan investigation, especially if there are people already drowning in debt taking-on even more that’s nearly impossible to pay. Same for those tax dodgers; £50m is a huge chunk of money! If they get that, what economic crisis?

What were your top finance stories of the week? Tell me about them in the comments below!

Image by: Natloans via Flickr

Living with a low credit rating can be worrisome and render you ineligible for loans and credit cards without a high interest rate attached. While it’s not the best thing to have a low credit score, it’s not impossible to repair your rating- if you’re willing to work at it. Consider these easy tips for improving your credit rating.

Credit cards

There are a few options with credit cards in terms of raising your credit score. First, if you already have a credit card, try your best to pay it off in full every month. If you’re not able to do this, at least make the minimum payments on time. This will show that you are aware of your debts and making an effort to pay them off.

If you don’t have a credit card, consider applying for one. Make small purchases on this card and be diligent in paying it off in full. Taking out a credit card and not ever using it will not help your credit score. They want to know you can borrow money and pay it back responsibly.

If you are currently paying off a credit card, you can still consider taking out a second card. This is risky if you are an impulse shopper! ONLY take this step if you are sure you can be diligent in using this card only for small purchases and be sure to pay it off on time every month. If you are serious about raising your score, you have to be serious about not over-spending.

Also, keep in mind that it’s not the best idea to max out your credit cards or, conversely, to cancel one. These events raise flags in your credit score, even if you have paid off the balance completely.

Debt

If you are already swimming in debt and it’s affecting your credit score negatively, it’s a good idea to make a payment plan and stick to it. Even if you are just slowly digging away at your debt, an organised and consistent payment plan will reflect positively on your credit score (though it won’t fix it completely, it’s a good first step!)

Loans

Taking out a manageable personal loan that you can easily pay off will also help boost your credit score. Unlike a credit card, you don’t necessarily have to spend the money you get from the loan- just be sure to pay it off with monthly payments.

It’s always a good idea to pay your bills- all of them- on time and in full. Also, keep an eye on your credit score. It is a reflection of your spending and financial habits and the information is available to you. It’s better to know now than be surprised later.

Do you have any credit-score-raising tips? Tell us about them in the comments below.

Image by: rinkjustice

The majority of us will at some point have come up short money wise at least once in our life. It may have been an unexpected bill or expense that put you off your budget but how did you handle it? There appears to be a worrying growth in the number of businesses offering payday loans.

Payday loans are loans meant for the short term, you can usually borrow a couple of thousand with a lower number of checks and have the money in your account within fifteen minutes. Now this all sounds too good to be true. That is because it is. There is a real worry that people are turning to these payday loans as a viable way of sorting out there financial problems. With some organisations charging interest as high as 4,000% it surely must be seen that these organisations are preying on people who need help.

Have a look at this video which looks at the standards and regulation of the payday loans.

There is a real risk of people falling into a rolling debt. They may borrow a small amount of money for an emergency and find them selves paying more in interest and unable to pay back the amount, this is when the trouble begins, the amount of interest will continue to put the individual in a very tight position. Perhaps leading to the individual taking out another payday loan and digging themselves deeper into a financial hole.

So what are the alternatives?

• Put the emergency amount on a credit card – much lower interest.
• Create an overdraft or increase the level of your overdraft – depends if the bank will allow you to do this.
• Borrow from friends or family – again depends on the amount and how kind they are feeling.

We at cashzilla believe that there needs to be regulation placed on these companies and help offered to those unfortunate people who have fallen into this financial trap. There are people who have taken out payday loans and have repaid them quickly and have had no problems but there must be something put in place to stop people from finding themselves stuck at the bottom of a financial mountain due to the huge amounts of interest put on an emergency loan.

Have you ever taken a payday loan? Did you have any problems paying them back? What do you think would be a better alternative? Any thoughts and comments please leave them in the section below.

The BBC report that the OFT has issued guidelines to lenders and borrowers about when their loans and other credit may, and may not be enforced. The guidelines come in the wake of OFT fears that some debtors may be misled into their ability to have debts written off.

The OFT draft guidance focuses on rules laid down by the Consumer Credit Act and draws on recent rulings by Judge Waksman at the High Court in Manchester. In his ruling the judge ruled that it was acceptable for lenders to produce reconstituted copies of original loan agreements which contain all the original information, apart from the few exceptions that the law allows (which include the signature, signature box and date of signature for the purposes of providing the borrower with information about their debts when challenged to provide a copy of an alleged debtor’s credit agreement.

The OFT believe some debtors are being misled into believing their credit agreement is unenforceable and can have debts legally written off if certain information is missing from the agreement. Debtors have typically sought to challenge their lenders to meet strict criteria as led out in the Consumer Credit Act. One such clause challenges lender to produce a ‘true copy’ of the loan agreement – ie. one that has been signed by the debtor. It is argued that if a signature, date or terms of credit aren’t present then the agreement could be deemed unlawful.

However, the judge also stated that the agreement should contain the borrower’s name and address at the time of signing, while in the case of an amended agreement the lender should provide copies of both the original and amended agreements.

While Cashzilla doesn’t advocate debt avoidance, it can’t help but feel there is a fatal flaw here in that ownership of debt can surely only be determined by the presence of a signature, otherwise it can only be implied? If a reconstituted credit agreement can be considered legal in absentia of a debtor’s true signature, what safeguards does the average person have in these times of identity theft against any enforcement action where a fraudulent credit agreement exists?

As usual the law will give the benefit of the doubt to the lender, leaving innocent peoples’ financial affairs in tatters and that’s wrong. Cashzilla wonders if the Judge and Office of Fair Trading have thought of the implications of giving Identity theft a green light?

The report, which looked into borrowing through personal loans, hire purchase agreements, credit cards and overdrafts across 16 European countries, indicated that the UK had an “insatiable appetite for credit”, with UK residents owing on average £3,175 compared with the average European who owes the lesser sum of just £1,558 in unsecured debt.

Check out the BBC for more details, but don’t say that you hadn’t been warned by this little personalfinanosaurus before.

The new measures will allow students to apply for their loans and grants online at the same time whilst they also complete their college applications.  Prospective students will additionally provide information on the various forms of financial support that are available
across the majority of course ranges and online financial calculators. 

The minister has also pledged to deliver faster loan and grant decisions as well as quicker payments, although you may be forgiven for viewing this last part with a touch of cynicism.

The existing Student Loans Company is due to be reformed  in order to meet these new challenges and processing. 

The minister stated, “As well as clearer information, faster decisions, timely payments and
accurate repayments, the transformed service intends to provide
taxpayers with better value for money by generating savings from
delivery processes to be spent on other priorities.”

Another change that has been proposed is the implementation of loan repayment collection directly through the tax
system, rather than through the existing channels. 

Can anyone else foresee another benefits agency payment style disaster in the offing?

Just me being cynical again then.