Banks Win Overdraft Ruling

Supreme Court Ruling Sees Banks Win Overdraft Charges Case

The Supreme Court confirmed today that the Bank’s unarranged overdraft charges are an important part of current account services and that the amount of those charges is not assessable for fairness.

OFT Disappointed by Supreme Court Judgment

The judgement stated that the court did not have the task of deciding whether or not the system of charging current account customers was fair, but whether the OFT could challenge the charges as being excessive in relation to the services supplied in exchange.

The Office of Fair Trading said it was disappointed by today’s Supreme Court judgment, as the decision follows more than two years of test case litigation.

Research conducted by the OFT found that banks collected a third of their retail revenues from unarranged overdraft charges and that average paid charges for unarranged overdrafts came to £205, with 1.4 million people paying over £500.

“Clarification of the Law”

The British Bankers Association, representing the banks, said it considered the decision as a “clarification of the law” rather than a “victory”.

Despite the Court rule, the Office of Fair Trading is expected to continue to push for fairness to apply to charges, as the ruling stated they could still assess the fairness of charges but under different grounds.

Payplan

If you are struggling to repay mounting overdraft charges then contact Payplan for debt advice online or telephone 0800 280 2816.

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Stabilising Fuel Prices Leads To Rise In UK Inflation Rate

October Inflation Rate Record for 2009

Recent figures released by the Office for National Statistics (ONS) saw inflation rise to 1.5 per cent, up from 1.1 per cent in September - the first rise since February this year.

Transport Influence on Inflation

Figures show that the increase in inflation is due to a very modest fall in the cost of fuel compared to the same period last year. Fuel prices fell by just 0.7 per cent between September and October, compared with the 6.1 per cent fall at the same time last year.

The increase in the price of second hand cars, rising at their fastest ever rate, and the 1.5 per cent increase in air fares have also contributed to the raise.

House Prices Have Increased RPI

The ONS also found the Retail Prices Index (RPI) annual inflation fell by 0.8 per cent, compared with a fall of 1.4 per cent in September. This sees the biggest monthly rise since 1990 and is partly due to the slight increase in house prices this year compared to falling prices in 2008.

Economists further predict that inflation rates may continue to rise by the beginning of 2010 as the temporary reduction in VAT is returned to the usual 17.5 per cent in January.

Payplan

If you’re struggling to pay your bills and are behind with debts due to increased living costs, then contact Payplan for debt advice online or telephone 0800 280 2816.

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Rising Unemployment Shows Signs of Slowing

Latest ONS Statistics Show Slowdown in Jobless Rates

The recent rise in unemployment in the UK shows signs of slowing, figures show. Unemployment increased by its slowest rate for 18 months in the third quarter of the year, hitting a lower than expected total of 2.46 million, according to the Office for National Statistics (ONS).

At the same time, the number of people in work increased by 6,000 to 29 million, the first quarterly rise since the summer of 2008.

Gloom for Young Unemployed

However, whilst the overall rate of increase is slowing, the position of the young unemployed is worsening and this group appear to be bearing the major brunt of the recession. ONS figures show youth unemployment has risen by 15,000 to 943,000.

Out of Work for 12 months

The figures also showed that the number of people who have been out of work for longer than a year rose by 71,000 to 618,000 in the three months prior to September, the highest level for 12 years.

Whilst slowing unemployment can be met with some enthusiasm, the reality of these figures shows that unemployment rates are still a long way from recovery.

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APR Minimum Payment Danger

How the minimum payment can mean you pay the maximum price

As UK credit card debts soar, it is important to understand how Annual Percentage Rates (APRs) can affect how much you really owe, because your APR can disguise the danger of only making the minimum payments required.

Here are two important factors that will affect the cost of your repayments:

Interest Rate

The interest rate is the initial cost of borrowing. For example, if you borrow £1000 at 20% APR, to be paid over a year then expect, to pay £200 in interest. Clearly, the higher the APR the more you will end up paying back.

Timescale

The length of time you borrow for will affect the amount of interest you pay - the APR is exactly what it states and charges for each year you owe the debt. This means you’ll start paying interest on top of interest. Your minimum monthly payment will only go towards paying that month’s interest, rather than actually decreasing the amount you owe.

You therefore extend the time it will take to repay the debt.

For example, if you had a credit card debt totalling £3000 at 20% APR, and you only paid a minimum repayment of 2% or £5 each month (whichever is the the higher), it could take 52 years to pay off in full and cost £9,204 in interest!!

Can’t afford the Minimum Repayments?

If you’re struggling to make the minimum repayments towards your debts, then you can get free debt advice from Payplan online.

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