Category Archives: Short Term Loans

4-Must Have Insurance Policies For Your Family Besides Health/Medical Insurance

4-Must Have Insurance Policies For Your Family Besides Health/Medical Insurance

The main aim of insurance is to protect you against risks. There are insurance covers that can protect you from just about any risk you can imagine today. But given the nature of risks, i.e. there are too many risks, it is impossible to cover yourself against all of them. This leads us to a very interesting question; which risks should you consider first?

Eventualities like sickness can unsettle your finances. Many people take emergency loans to cover unexpected medical bills. Short term loans like payday loans can cover a small medical bill. What happens when you or a family member has to undergo an expensive medical procedure? We’ve gone through the trouble of selecting the most important insurance policies below.

Here are the 4-must have insurance policies for your family besides health/medical insurance.

1. Life insurance

Every family should have life insurance coverage for both parents/spouses. Life insurance is crucial for ensuring the family doesn’t suffer financially in case a breadwinner dies. Life insurance is crucial because it covers for funeral expenses, which can be very high. Life insurance also replaces the income of a spouse or parent for a long period allowing the family to go on with life as usual. You should have coverage amounting to at least a year’s salary. If you earn £50,000 for instance, you should have a £500,000 policy or more. The same applies for your spouse/partner. If your partner or spouse doesn’t work and you have children, it is still important to cover them because of their contribution to childcare among other chores which can take a huge portion of the family budget when they are gone. It is also a good idea to cover children as well if their demise will have a significant effect on the family’s finances. There are many types of life insurance covers for families in the UK covering all kinds of risks/expenses. Take your time an pick a cover that works well for your family.

2. Disability insurance

This is another essential insurance policy for your family. Life insurance coverage should come first due to the devastating nature of eventualities like death. Disability is equally devastating. Even though a parent/partner may still be there, disability can render one jobless as well as drain the family’s budget in regards to healthcare costs. Disability insurance policies protect from loss of income among other related expenses arising. This type of cover may be more important than life insurance to some people since it can render a person jobless for life and introduce costly expenditures till death. Some people overlook disability covers because of the mere fact that they are healthy and disability looks farfetched. The most important thing to note is anyone can become disabled in an instance i.e. in case of a car accident.

3. Homeowners insurance

A home is a priceless family possession. As a parent, you don’t want your family to be rendered homeless by any eventuality whether it is natural and manmade. A fire can destroy your home. Your home can also be destroyed by harsh weather, an earthquake, etc. Homeowners insurance covers the cost of replacing the structure as well as contents. Homeowner covers can also cater for the cost of buying a new home in case your current one is destroyed completely. Other related costs included in homeowner covers include the cost of living elsewhere while your home is being repaired. It is important to have coverage for such costs since they are significant and can easily plunge your family into financial problems. Although the chances of your home being destroyed are very slim, this eventuality can force you to take loans and living in distress. A homeowner’s cover allows you to live in peace knowing you won’t lose your home in case of anything. There are many types of homeowner’s covers available today that cover anything you can think of including the cost of upgrades, special features and injuries that may occur on your property. Consider getting such a cover. If you are renting, you should take renters insurance instead.

4. Identity theft insurance

In this current era where everything revolves around technology and the internet, it is important to protect yourself against identity theft. This kind of coverage may seem unnecessary but take some time and think of the consequences of identity theft. If you take payday loans, use credit cards or have a genuine online presence of any sort, you are at risk. Someone can steal your identity online and use your name to orchestrate crimes. You need money to protect yourself against losses arising from such eventualities. An identity theft policy can also cover legal fees involved when restoring your name. We are all at risk of identity theft today provided we use computers, Smartphones and online products/services. Payday loan giant Wonga suffered a significant customer data breach in April 2017. The incident saw the personal details of 270,000+ customers stolen including bank account details. Any victim with identity theft insurance would have been covered in such an instance. Get the above insurance covers first before considering any others. Motor insurance is equally important although it is mandatory in the UK and most, if not all countries in the world.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Tired of Short Term Loans? Tax Incentives You Could Be Missing Out in The UK

Tired of Short Term Loans? Tax Incentives You Could Be Missing Out in The UK

Tax breaks can provide you with a few hundred pounds every year which is adequate for catering to emergency cash needs. To avoid taking short-term loans such as payday loans, you can turn your attention to the tax incentives you could be missing out now. Besides avoiding short-term loans, tax incentives can help you build your savings account. Many tax incentives are being left on the table by Britons. Here are some of them.

1. Marriage allowance

The latest government statistics show that over 2 million married couples in Britain miss out on a £600 each (£1200) yearly marriage tax break. The total unclaimed marriage tax breaks amount to approximately £1.3 billion according to a recent freedom of information request submitted to the UK government requesting information on the tax break. Britain has approximately 4.2 million married couples and 15,000 civil unions eligible for the tax incentive. However, only 1.8 million married couples have claimed.

The incentive dates back to 2005 and couples are allowed to back-claim £632.To claim this incentive, you need to be in a civil union or marriage. Cohabiting partners aren’t eligible. You also need to be a taxpayer. However, spouses who aren’t taxpayers but are married to individuals who pay tax are still illegible to the incentive. To benefit, the lower earner must earn £11,500 or less. The tax is still applicable to individuals receiving a pension as well as those living abroad provided they are getting a personal allowance.

2. Childcare costs tax credit

You may also be missing out on working tax credit which is a tax incentive that helps with childcare costs. Working Tax Credit takes care of partial costs of childcare. You may be eligible for an additional £122.50 tax break every week for a single child or an extra £210 every week if you have two or more children. To qualify for childcare tax incentives, your kid must be minded by an approved childcare provider. Visit https://www.gov.uk/help-with-childcare-costs to get more information on tax incentives relating to childcare costs in the UK.

3. Travel incentives for employees

The UK government also gives travel tax incentives to employees whose work requires traveling which disrupts the normal daily routine. Please, note this tax is not given for normal daily commutes. The incentive considers travel expenses like toll charges, parking fees, business call costs, airfare, mileage, taxi, bus and/or railway transport costs. If your work requires you to travel and make overnight stays, you may also be eligible for this tax incentive on accommodation expenses like food and drinks. Claiming this tax incentive is easy. You need to file a self-assessment tax return online or via post (print and post form P87). You can also claim by phone if you have claimed successfully before. You can get more information about this tax incentive here: https://www.gov.uk/tax-relief-for-employees/travel-and-overnight-expenses.

4. Food-related tax incentives

You can also claim some tax relief for food costs incurred outside your routine/pattern. Please note this tax isn’t applicable to food costs incurred when taking clients out for lunch. A person who works from home can, however, claim food costs incurred when attending a work conference. This tax applies to reasonable expenses. For instance, you can’t claim tax breaks on food expenses related to expensive wine. Visit: https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37670 for more information.

5. Research and development tax credits

You could also be eligible for R&D tax credits if you are a business owner. This tax incentive has been in place in the UK for years. The government put this tax incentive in place to encourage companies to spend on research and development which is considered crucial for economic growth. The incentive was also put in place to encourage investment in innovation. Currently, over 170,000 research and development claims have been submitted in the UK since 2001 according to HMRC’s Tax credit statistics. Over £16.5 billion has been claimed already as tax relief. Small business owners are claiming this tax more and more every year. In 2015-2016 for instance, SME claims increased by 22% compared to year 2014-2015 (from 17,875 to 21,856).

If you own an SME, you have an opportunity to get some tax breaks. R&D tax applies to SMEs with less than 500 employees and a turnover not exceeding 100 million. The relief is extended to research and development initiatives like software development, combining existing technologies, ownership patents as well as employment of software engineers, scientist or developers. SummaryYou probably leave a lot of money on the table in the form of unclaimed tax incentives. The information above can help you save hundreds and sometimes more than a thousand pounds every year in the form of tax breaks. You can then channel this money into your savings or emergency account to avoid over-reliance on emergency loans like payday loans.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Festive Season ''Side Hustle'' Ideas to Help You Avoid Short Term Loans

Festive Season ”Side Hustle” Ideas to Help You Avoid Short Term Loans

If you’re keen on enjoying this festive season without taking short term loans in January, we have some useful side hustle ideas for you below. We’re all guilty of overspending during the festive season. It is very challenging trying to stay on budget during festivities. You have two main options. One, you can agree to overspend or look for ways to make more money this Christmas. There are many ways to make some extra cash today. Here are some great ideas to consider.

1. Become an Uber driver

Anyone can earn money driving thanks to Uber. This tip is great if you already have a car and wouldn’t mind making some extra cash driving during your free time. Driving for Uber is a great side hustle today because you don’t need much to get started. You just need to meet some simple prequalifications i.e. driver/car tests/inspections. Visit https://www.uber.com/en-GB/drive/requirements/ for more prequalification requirements. Furthermore, you can maintain your own schedule and benefit from Uber’s extensive network of clients globally. What’s more interesting is the fact that there are many similar opportunities. Uber isn’t the only taxi app in the UK. You can also become a taxify driver.

2. Become a freelancer

You can turn to the internet for freelancing jobs. The internet is packed with freelance opportunities in all niches. You just need to choose a niche and get started. It’s also important to choose a freelancing opportunity that is in line with your interests, passion or job description. Freelancing websites like freelancer, Fiverr and Upwork have many opportunities for people who would love to do web design, writing, internet marketing, programming, translation, etc. It doesn’t cost you anything to become an online freelancer. Simply visit a freelancing website and register to get started. All you need is a computer and internet access. You can earn hundreds of pounds in a short time which is more than enough money to cater for overspending during festivities.

3. Sell items online

You can also consider selling items online on websites like eBay. Instead of taking a short term loan this Christmas, you can sell old items like household appliances, furniture, collectibles among many other things to make some extra money. You can focus on things you don’t need to de-clutter your home as well as make some money in the process. If you are serious, you can sell items online professionally and turn it into a real business. eBay has over 18 million registered buyers in the UK today offering a ready market. You just need to familiarize yourself with the selling requirements and basics to get started http://pages.ebay.co.uk/help/sell/selling-basics.html. For instance, you need high quality photos and interesting descriptions to sell fast on eBay.

4. Rent a spare room on Airbnb

You can also earn some quick cash renting a spare room in your home this festive season. This side hustle idea is great given the number of people willing to get affordable accommodation during the festive season. You could even consider getting affordable accommodation on Airbnb as opposed to paying for an expensive hotel this Christmas. Airbnb has revolutionised the accommodations industry globally by connecting people with spare rooms/space with those looking for such spaces. Airbnb pays for guest check-ins within a day and does thorough checks so you don’t have to worry about security risks. You can visit the official Airbnb site in UK for more information: https://www.airbnb.co.uk/

5. Create and sell an online course

You can also leverage on the skills you already have to make some extra money this festive season. There are great online course platforms like Teachable and Udemy you can use to create a course in line with your profession. Your income will vary depending on the complexity of the course so it’s important to choose a subject you have mastered. Many people are looking online for courses as opposed to attending traditional classes so this idea has a lot of potential.

6. Manage social media presence for small businesses

Last but not least, you can become a social media manager for small businesses around you. This idea is perfect if you are already proficient in social media and you have some time to spare. Businesses have seen the power of social media marketing so it shouldn’t be a problem identifying those small businesses which need such services around you and convincing the owners to hire you.

In summary, there are multiple ways to make some extra cash today. You just need to be innovative and ready to try. There’s no reason why you should take a short term loan this festive season when you can try out some of the ideas discussed above.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Consumer Finance Up 3% in September 2017

Consumer Finance Up 3% in September 2017

The latest on consumer finance in the UK According to the latest figures by the FLA (Finance & Leasing Association), consumer finance growth is up by 3 percent in September 2017 compared to the same period last year. Q3 2017 has seen a new business growth of 6% compared to Q3 2016.In September 2017, new business generated by credit cards and personal loans grew by 3% compared to September 2016. Online credit and retail store new business increased by 6% over the same period. Second charge mortgage value (new business) also grew at a similar pace in September 2017. However, new business volumes dropped by 2 percent over the same period.

According to Geraldine Kilkelly, Chief Economist and Head of Research at the FLA, new consumer credit is expected to increase by 3.3% in 2017, a significant drop from the 6.3% growth in 2016. This forecast comes in the wake of subdued consumer confidence and the slowest business growth since April. Consumer confidenceAccording to the most recent Lloyds Bank spending power report, consumer confidence is at the lowest level in 2.5 years (since April 2015). Consumer confidence is a measure of how consumers feel about their current as well as the future state of their finances and economic conditions as a whole.

In the IPSOS MORI monthly survey involving 2000+ UK bank account holders, 61% felt positive about their finances in October, a 3pp drop from 64% the previous month. Consumer confidence is a vital consumer finance metric. The measure is at its lowest level in 30 months. Statistics indicate that there is a huge gap between different age groups. Majority (78%) of individuals over 65 years old are positive about their financial situation compared to 60% of individuals between ages 18 and 24 years and 61% of individuals aged between ages 25 and 34 years. The latest statistics also show that women are less positive than men in regards to consumer confidence, i.e., 58% against 64%. Although we are approaching the festive season which is characterised by overly positive consumer finance metrics (increased borrowing and spending), 38% of individuals in the Ipsos MORI survey are worried about personal spending during Christmas. 13% of individuals in the survey are planning to cut back on typical spending to cater for festive spending.

The number of UK households with comfortable financial situations dropped in October 2017 by two percentage points to 60%. The situation is worse among households with children aged 18 and below. Lloyds Bank customer account data analysis shows that people are spending more on essentials. The latest statistics show a 2% growth in essential consumer spending in October. This represents a 17-month consecutive growth in essential spending with food accounting for approximately 40% of all essential spending.

Fuel spending is also significant according to the Lloyds Bank data analysis with an increase of approximately 5% which represents a 14-month continuous growth. Electricity and gas spending increased by 2.5% from 1% last month. Energy spending has been rising for the 3rd consecutive month after enjoying a continuous decline for three years. According to Robin Bulloch, Lloyds Bank Managing Director, although most people are positive about their finances, there was a significant drop in overall consumer confidence in September 2017. Bulloch attributes the drop to factors like inflation. Since inflation is at a 5-year high, Bulloch states that consumers, more so millennials, have begun to feel the pinch more than everyone else. He doesn’t find it surprising that the UK government reached out more to millennials in this week’s budget. As inflation rises and wages stagnate, UK consumers are being forced to rely on loans. This explains why there are more and more people taking out payday loans, credit cards and other forms of short term loans today. Consumer finance growth isn’t necessarily a good thing if consumer confidence remains low especially among the population that is supposed to drive the economy forward.

Although the budget has some interesting perks that will see minimum wage workers earn more and households save more in taxes, critics argue that the budget perks don’t mean much when you consider inflation. As the cost of essential increases, it is advisable to spend wisely during this festive season. You should stick to affordable goods during this season to avoid starting 2018 in debt. Avoid loans at all cost except for emergencies. Managing your finances is critical during this period since loans are easily accessible now more than ever before and we are approaching a time of the year characterized by overspending.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The Fastest Way to Pay up Short Term Loans

The Fastest Way to Pay up Short Term Loans

Living in debt can be very stressful. You have to make sacrifices to meet your debt obligations or face serious consequences like getting a bad credit rating, losing an asset, taking up more debt, etc. It gets worse when you live in a country like the UK where the standard of living keeps rising yet wages have stagnated forcing most people into debt. The current debt situation in the UK is alarming given the fact that the number of insolvent individuals (young people between 18 and 34 years) has increased drastically by 31% over the past year alone according to the Insolvency Service. Debt is apparently a problem so how do you get out of debt, especially short-term debt?

It doesn’t matter if you have payday loan debt or credit card debt. The tips/steps discussed below should work for all (if not most) types of short-term debt.

1. List all your debt

Debt repayment becomes a problem when you have more than one loan so, start by listing all the short-term debt you have from the largest to the smallest. It may seem obvious, but most people can’t tell you how many short term loans they service every month. This is understandable considering you can take multiple credit cards today, a payday loan, overdraft, small personal loan all at the same time. To ensure you don’t leave anything out, look for your monthly income statements and follow all deductions to ensure you don’t miss anything. The listing should include all important information, i.e., loan amount, interest amount, etc.

2. Identify the most expensive debt

After listing all your debt, you will be able to identify the most expensive debt. You should prioritise repayment from the most to the least expensive. Most people do the opposite for psychological reasons, but this shouldn’t be the case. The cost of the debt should be your utmost concern if you want to repay the debt fast and effectively.

3. Pay more than minimum

Once you have a clear picture of the debt you have, it’s time to start making repayments. To repay your debt in the fastest way possible, you must make sacrifices and pay more than the minimum payments every month. Besides repaying your debt in the shortest time possible, you will also save money on interest repayments. However, find out if you are liable to any prepayment penalties or charges before you get started. Some lenders discourage early repayment, so it’s important to find out where each lender stands.

4. Consider stopping your monthly savings/investment

To pay more than minimum every month, you need more money. For short term debt, it may not be practical to make lifestyle changes. Furthermore, these changes may not have a significant impact. You can stop your monthly savings/investment every month and channel this money to debt repayment. This option is great because it is easily accessible and doesn’t attract penalties. Furthermore, there is no need to continue saving when you have expensive short-term debt. Savings should resume after you have cleared such debt.

5. Consolidate

If you have a substantial amount of expensive debt that can’t be covered effectively by your monthly savings, you can consider options like debt consolidation. This option allows you to merge all your debt into one debt making it more manageable and cheaper. There are however shortfalls to consolidating debt. For instance, you need to be very disciplined since this debt repayment method works only when you meet your repayment obligations to the letter. It may also be a bit expensive when paying up debt in a short time.

NB: Although the above information is bound to help you clear your short-term debt in the fastest and most cost-effective way, it is worth noting that there are exceptions. For instance, it might not be prudent to settle the most expensive debt first because of penalties that may be charged for early repayment. Furthermore, you need to decide what is more important to you, i.e., settling the debt in the fastest way possible or settling all your debt regardless of how long it takes.

Lastly, you need to make some critical financial decisions going forward to avoid finding yourself in the same situation. For instance, you need to prepare and stick to your budget and avoid spending habits that cause you to borrow excessively. You should also seek professional help if you feel you can’t make significant progress on your own.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The FCA Maintains the Payday Loan Price Cap in Place until 2020

The FCA Keeps the Payday Loan Price Cap in Place until 2020

On 31st July 2017, the FCA published the results of a review it had done on high-cost credit which included an assessment of the effectiveness of its recent payday loan price cap.

The review offers undisputed evidence that the FCA regulation on payday loan lending has worked in favour of consumers as intended given that approximately 760,000 payday loan borrowers in the UK are saving over £150m every year. The review also shows that payday loan firms are now seeing fewer borrowers and debt charities with debt problems arising from expensive short-term credit. For these reasons, the FCA has decided to leave the current payday loan regulation unchanged until 2020.

Other forms of high-cost short-term loans

Besides clearing concerns on payday loans, the review also addresses concerns on other high-cost credit such as overdrafts. According to the review, The FCA feels fundamental changes on overdrafts are necessary in the future. Fees charged on unarranged overdrafts remain high and complex.

Home-collected credit, Rent-to-own credit as well as catalogue credit sectors are also on the spot. Although high-cost products and markets have many similarities, there are significant differences on how these products and markets work as well as how borrowers use them. The FCA is in the process of making tailored solutions to address these issues and is set to give a way forward in spring 2018.

According to the C.E.O. of the FCA, Andrew Bailey, high-cost credit products are a key focus for the regulator given the risks they expose to vulnerable customers. Bailey is pleased with the current evidence showing a clear improvement in the payday loan market after a period where payday loan firms used unacceptable business models. Besides the obvious improvement, he feels there is more to be done in terms of identifying other areas where short-term credit consumers may be suffering. Bailey’s focus is now on the nature as well as the extent of problems surrounding unarranged overdrafts without touching on the positive that customers find useful.

Clarifications

Alongside the review are proposals published to clarify FCA rules on affordability and creditworthiness. Most lenders understand the regulator’s rules concerning checks on prospective borrower’s creditworthiness including the products they can afford, however, there are uncertainties in parts of the credit market. For this reason, the FCA is proposing to effect some changes to make its expectations clearer.

The regulator has also published additional details on its motor finance work highlighting the issues it is considering as well as the steps it will take to develop an understanding on the market. An update is expected to be issued in 2018 during the first quarter.

Industry reaction

The FCA review results and comments have been received well in the industry. According to Eric Leenders, Managing Director, ”UK Finance members are committed to responsible lending and serving better those clients who need access to credit regardless of the type of credit product they need.” Leenders affirms the importance of consumer credit in promoting economic growth when used sustainably and recognises the importance of lenders working hard to balance between helping customers and ensuring long-term affordability. Leenders also agrees that transparency is an important issue and UK Finance is doing everything necessary to make overdraft fees clearer. Leenders also stresses the fact that UK Finance members are open to help customers struggling with repayments and welcomes efforts by the FCA to work closely with lenders.

Stephen Sklaroff, Director General of the FLA (Finance and Leasing Association) is of the same opinion. According to Sklaroff, ”the FLA is working tirelessly to make sure its members lend responsibly as well as treat customers fairly. We are aware that the FCA has found that most lenders are addressing affordability appropriately and we look forward to engaging the FCA on affordability assessments as the regulator does more exploratory work in motor markets.”

Gillian Guy, Citizens Advice C.E.O. attests to the fact that the payday loan price cap has protected many borrowers from unmanageable debt. According to Guy, ”many people were subject to extortionate charges trapping them into debt. Since the price cap among other new measures, fewer people are seeking our help.” Guy, however, states that things have improved for payday loans only. ”Other high-cost loans such as guarantor loans, doorstep loans, rent-to-own services and overdrafts are experiencing problems. It’s good to see the regulator recognise this and take the necessary action. We think a similar price cap will help safeguard consumers of these other forms of high-cost credit.”

 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

5 Important Tips to Keep You Safe From Fraud

5 Important Tips to Keep You Safe From Fraud

Cybercrime incidences have increased drastically over the past decade. According to the Financial Fraud Action UK, online fraud incidences have increased by 53% over the past year alone. The latest statics show that someone is scammed online, in the UK, every 15 seconds. Most of these cases are affecting credit and debit card users who divulge their personal/bank details online making it easier for scammers to use this information in cases of data breaches. Short term loan borrowers like payday loan borrowers have also been victims of online fraud in the UK since such loans are acquired online.

There are a few quick steps you can take to avoid being part of this shocking statistic. One, you must trust your gut feeling when selecting offers or submitting personal information online. If an offer seems dodgy or too good to be true, it probably is. Two, you should never open unsolicited emails. Lastly, keep your pin/s and passwords secret/safe. Never divulge pin/password information online. Here’s a more in-depth discussion avoiding fraudsters.

Create ”perfect” passwords

You can’t afford to use regular words or obvious number combinations as passwords today. Hackers can ”break” such passwords. You should never use obvious words as passwords, i.e. your middle name, children’s names, etc. as name passwords are the easiest to crack. The ”perfect” password today consists of; random words that are unrelated to your life. The password should also have many digits preferably six or more that are random but easy for you to remember. Stay away from birth dates. Your ”perfect” password should also include symbols such as $, #, %, etc. Ideally, the symbols should be inserted randomly between the numbers and letters/words that make up your password. Lastly, use both capital and small letters. A great example of a perfect password would be You1r7Kin9gSh88ip05$$!! You can use password testing tools to analyse the strength of your password.

Maintain unmatched social media safety/privacy

Social media has made it easy to acquire a person’s personal information without their consent. If you don’t set the appropriate security/privacy setting on all your social media accounts, you don’t have control over who views your personal information such as; your real names, date of birth, personal address, etc. which can be used to hack your online accounts. Don’t add people you don’t know to your social media profiles or disclose too much personal information on social media. Disclosing your pet’s name for instance can make your online accounts vulnerable if you have used your pet’s name as a security question.

Maintain unmatched email safety

Anyone can send you an email provided they know your email address. Considering emails are used to send viruses/malicious software, you should never open unsolicited emails as well as unknown attachments or click on links whose source can’t be verified. You should also be wary of emails sent from sources you assume to know, i.e., your bank. Many people have fallen for spear phishing in the UK where fraudsters send automated emails appearing to originate from people/institutions you know such as your bank/credit card company. If you open and click on links on such emails by mistake, change applicable passwords immediately. You should also pay attention to the email safety information your bank sends to you as well as familiarise yourself with the official email address of your bank/credit card company.

Invest in a good anti-virus software

You can save yourself from all the trouble of keeping up-to-date with the latest online scams by investing in the best anti-virus software you can get. A good anti-virus will offer you all kinds of protection online giving you a stress-free experience. Never use free anti-virus software if you use your computer to do online banking transactions among other online transactions involving sensitive personal information. Free anti-virus software offers basic protection which isn’t enough to detect and deal with threats effectively.

Don’t forget to protect your phone

You should also invest in a good Smartphone anti-virus. Smartphones have substituted personal computers and laptops. Many people make payments and submit sensitive personal information over their phones. To avoid exposing yourself to fraudsters, make sure you Smartphone has an anti-virus. You should also restrict the data/information you share with websites. It’s also advisable to disable features such as autofill and unsolicited notifications. You should also avoid performing sensitive transactions over your Smartphone. Lastly, make sure your phone has a strong password/passcode. Your personal information should not be at risk if you lose your phone.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

CMA competition markets authority

Summary of the UK Payday Lending Market Investigation by the Competition Market Authority (CMA)

Just recently, the Competition Market Authority (CMA) conducted a payday lending market investigation (Click here to download the official report). Below is a summary of the findings as well as recommendations.

Overview

According to the CMA investigation, the average size of a payday loan in the UK stands at £260 and almost all loans are £1000 or less in value. The loans vary depending on repayment terms with most loans repayable in a month or less with a single instalment.

The average term of most payday loans in the UK is just over 21 days or three weeks.
In terms of growth, the UK payday loan industry grew the fastest from 2008-2012. During this period, payday loan lenders we issuing approximately 10.2 million loans per year valued at approximately £2.8 billion. Growth has been reducing since then. In 2013 for instance, payday loan industry revenues dropped by 5%. The market also contracted in 2014 with the number of new loans falling by approximately 27% between January and September 2014.

The year 2014 saw four out eleven major payday loan lenders, as well as many small lenders, stop offering payday loans. The market hasn’t recovered since following the introduction of Price Cap Regulation in January 2015 which saw many payday lenders unable to operate profitably under the new regulation.

In-depth CMA findings

The CMA payday lending market investigation reveals a lot of information on various aspects of the industry. Here’s what you need to know;

1. Payday loan usage (number of loans taken out per customer)

According to the CMA report, most payday loan customers take out many payday loans over time with the average lender taking out approximately six loans every year. In regards to borrowers’ lender preferences, most borrowers use two or more lenders.

2. Online vs high street borrowing

In regards to loan platforms, most payday loan customers today prefer taking out loans online i.e. 83% vs. 29% who take out loans on the high street. 12% of all payday loan users borrow using both channels today. On amount, borrowers borrow more online i.e. £290 compared to the high street £180.

3. Borrower loan application assessment

Most payday lenders today have developed computerised risk models that help them conduct thorough assessments on their client’s credit worthiness as well as their ability to repay the loan successfully. Borrower assessment has been and is still part of every lender’s loan application process. The sophistication of risk models, however, varies from one lender to another. In regards to loan application success, the number of loan applications turned down was above 50% for most of the major lenders back in 2012. The figure continues to rise to date as lenders become more cautious in the wake of the new FCA regulations.

4. Payday loan customer profile

The CMA investigation shows that the typical online payday loan customer in the UK has an average income of £16,500 while high street borrowers have an average income of £13,400. In general, most people who have been using (and are still using payday loans) in the UK earn less than the average income in the UK which stands at £17,500.
In regards to gender and occupation, most payday loan customers in the UK are male working in full-time jobs. They also happen to be younger (than average) and living in larger households.

Most payday loan customers also happen to have experienced financial problems in the recent past. According to the CMA investigation, 38% of all payday loan customers have a bad credit score/rating while 10% have been visited by a debt collector or bailiff. In a nutshell, 52% of payday loan customers have faced some debt problems in the near past. The number of people who repay their payday loans in full has also decreased over time.

It’s also worth noting that most payday loans are taken on Fridays at the beginning or end of the month. Most borrowers also seem to be under some financial pressure when borrowing leaving little room for assessing other suitable credit alternatives that may be available to them. In fact, less than 50% of all payday loan borrowers shop around effectively before taking out payday loans. The typical payday loan customer is also recurring. Repeat customers account for a majority of payday loan business. Most borrowers also take loans from multiple lenders mainly because of problems with existing lenders i.e. late repayment, outstanding loan/s, etc.

5. Overall Payday loan usage

In regards to overall usage, most payday loan consumers (53%) use payday loans to cater for living expenses like utility bills and groceries. 10% take payday loans to pay for vehicle/car related expenses while 7% take payday loans to pay for general shopping such as clothes and household items. Only 52% of payday loan consumers use payday loans to pay for emergency-related expenses. This is despite the fact that payday loans are actually meant for catering for emergency expenses.

Recommendations

The CMA investigation reveals some difficulties in the industry which need to be addressed. Luckily, the CMA has given recommendations for dealing with these problems. Here’s what needs to be done;

1. There is a need to boost the effectiveness of price comparison websites

Most payday loan customers don’t have the luxury of choice when taking out loans as revealed in the investigation. Since borrowers take loans under duress, better price comparison websites can help borrowers shop for loans more effectively regardless of the time constraints or other problems present when taking out loans.
Better price comparison websites will also create a perfect environment for competition which will, in turn, result in better payday loans in every regard from the pricing/fees/charges to variety. Existing price comparison websites have numerous limitations that make it impossible for payday loan customers to make accurate comparisons.

2. More transparency on late fees/overall cost of borrowing

The CMA also feels there is a need for more transparency on fees charged in the industry by different lenders. The Authority believes the FCA needs to take more action to ensure all lenders have a legal obligation to disclose all their fees/charges on previous loans clearly to allow effective cost analysis.

3. Cooperation between the FCA, payday lenders, credit reference agencies and authorised price comparison websites

The CMA also feels the FCA must cooperate with all industry players more so lenders, credit reference agencies, and price comparison websites to improve payday loan borrower abilities to search the payday loan market extensively without compromising their credit history.

4. Real-time data sharing

There is also a need for real-time data sharing according to the CMA. Such efforts will benefit both borrowers and lenders. When lenders are able to get real-time access to their clients’ credit information, they will be in a position to do better borrower assessment and in turn, avail the best possible terms.

5. Increased transparency on the role of third parties like lead generators

The CMA also feels there should be more transparency on the role played by third parties like lead generators, affiliates, brokers, etc. since most of them pose as actual lenders when that’s not the case. The CMA stresses the need for the FCA to do more to make sure borrowers know upfront if they are applying for loans directly or indirectly. This move will reduce instances of erroneous expectations since most third parties tend to overpromise or provide inaccurate information.

Summary

The UK payday loan industry is far from its peak in 2012. The number of payday lenders has reduced following the introduction of the price cap regulation by the FCA. Lenders have also become stricter today. Unscrupulous lenders may have reduced, but borrowers remain vulnerable even after the new regulation since most of them borrow under pressure. There is hardly any time to compare payday loan lenders effectively, and price comparison websites are doing very little to help. This explains why the CMA is calling for better price comparison websites among other recommendations like transparency on fees, real-time data sharing and cooperation between the regulator, lenders, credit rating agencies and price comparison websites. Third parties also need to be more transparent when promoting lenders to ensure payday loan customers make the best possible decisions when taking out loans.

Financial education is also important to reduce over reliance on short-term credit to cater for living and emergency expenses. Financial education is bound to improve the customer profile of the typical payday loan user.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.