Tuesday, 31 January 2012

Move your Money! consumer revenge @ New Statesman


Not the first time we've blogged this and it may not be the last... But, where could you bank?

Hmm.. not suprisingly, we like ethical banking from the Co-operative, but bo doubt you'll find more to choose from at http://moveyourmoney.org.uk/ which launches today!


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Monday, 30 January 2012

Christine Lagarde on Innovation

As politicians and economists continue to argue the merits of cuts versus spending the world over, Christine Lagarde comes up with one key point - there can be no growth without innovation. To this, I should add that until we re-appraise our understanding of growth, there can be no innovation.

Original creativity, whether it manifests itself scientifically, technologically, or artistically shows no respect for social constructs. A child from a slum may have far more to offer the world in terms of life saving surgeries, carbon cutting energies and anthems to lift our soul than one born with a silver spoon in her mouth. We can never know this until we create more uniform access to opportunity.

All the more reason to stop tinkering with the ideological and start dealing with the practical, because it is not just a question of cutting and spending. Regulation of consumer markets and employment terms is key.

Unfettered, marketers mine consumer data to devise products and services that we have no choice but to buy. Why is bread more expensive than beer? Why does it cost more to heat social housing? Why, oh why, should poorer people pay more to bank, borrow or save? Indeed how can a young person from a low income household be expected to work unpaid? Should they never climb out of this trap?  

Since when were our taxes a dependable resource to mop up the aftermath of exploited employment and market trends?  When businesses actively make us more vulnerable - requiring care because our basic needs are unaffordable, or unable to take up an unpaid internship - should they not pick up the welfare tab?

It is plain lazy to assume that poverty and low academic attainment predisposes people to a lack of talent. Even the great Albert Einstein was slow to develop speech, failed entrance exams and copied another student's notes. In the current climate, it is dangerously unproductive to consign those in poverty to never revealing their talent and we should do well to eradicate the practices that impose this.

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Sunday, 29 January 2012

Morrisons make it with #MSavers

We’re very particular about advertising and sponsorship here at Zero-credit. There’s none of it!  We’ve been asked countless times to post a banner for this, or a link to that, and besides one brief trial to promote savings from mutuals with values similar to our own, we’ve never done it. Our independence is our strength and we believe in consumers and professionals making informed choices together.


Over the coming weeks, you will see the outcome of a very polite request by Morrisons for some of our coop members to try out their new M Savers range. Should the goodie bag our cash-conscious households receive represent the kind of value we call #creditfree, we’ll say so. 

Look out for the culinary critique of canny scot, Karen Bryan, at HelpmetoSave too – not much passes her eye for a deal! And finally? Due credit to Morrisons for a totally honest approach – it could go either way – though in our view, it pays to understand that loyalty cannot be bought.


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Friday, 27 January 2012

So you need cash now...?

Watching the #ITVtonight Twitter stream after yesterday’s programme, I could not help but notice how many people were rude about people who use short-term credit. This does not help.

Often someone who never thought they would need a quick fix loan thinks they are not weak or foolish enough to be caught out. When they are, they become too scared to tell anyone. Perhaps they too would have said rude things if it had not happened to them.

Feeling stupid stops people from seeking help and this is dangerous. You see, if you took out a short-term loan, then found it a struggle to repay, feeling that you could not ask for help, you might take out another loan or simply accept the charges to save face.

As an ex-bankrupt, I am well aware how you may feel about people like me not paying back debts. But the thing is, short-term lending is attracting all sorts of people who are operating illegally - some are out and out criminals, others get rich quick on the internet types.

Can you think of me as reformed character?  Would you accept my advice as a way of paying my dues?  Even if you are really sure of how to manage your money and that you’ll never get into debt, would you bookmark this page, just in case?  I’d like to save you a few quid.


Step 1 - OMG I need cash now

Think about what you need money for.  If it’s a one off expense like burst pipes or a replacement tyre, then a loan may ease your pocket, provided you can afford the repayment. This might be because you are about to change job and get a pay rise, or are owed a tax rebate.  Otherwise, you will have to find the repayment out of your day to day money and live frugally for a few weeks.

If you need the loan to repay other debts, or to cover day to day living costs, then the chances are that you have a “structural deficit” in your budget and you need to get your expenses under control. This does not always mean that you spend too much on silly things. It can mean you’re paying too much for insurance or energy, for instance.

Sometimes, you can shop around for lower cost goods and services, then work out a new budget yourself and it is always a good idea to keep working at this every couple of months or so. It is, after all, your money and you do need to have control over it, otherwise somebody else will!  

However, if you have a responsibility like caring for family or looking for work, your time might be scarce. Similarly, if you feel unsure of yourself, it makes sense to get help. Visit our planning and support pages to try out a range of tools, then choose the ones that you find easiest to use. Almost all of them are free and those that aren’t cost no more than a few pounds.


Step 2 – Getting the best loan deal

Short-term credit is expensive. If you think about it – and whilst you may need to borrow quickly, you should think about it carefully – no business is going to risk lending money to people who may not pay it back. The only way to cover that risk is to charge for it and that’s why we see loans charged at around £30 for every £100 borrowed. Some people are okay with that, others are not.

To avoid paying high charges for a loan, it makes sense to be sure of lending before you need the money, rather than to start looking for lending as soon as you need it.  If you know that mainstream lenders may not help you, the best way to safeguard against unexpected costs is to join a Credit Union where you live or where you work.

Credit unions require you to start saving before you can borrow, and most allow you to borrow once you have started to save around £20 a month for two or three months. Usually, you can borrow three times what you have saved so far, so after three months you might be able to borrow around £150. This will increase as you save more.


Step 3 - Still need the money now?

Sometimes there is no alternative to finding extra cash quickly. Do ask friends and family. The cost of living affects everyone and your loved ones will surely prefer to see you saving money. Lendfriend has some excellent informal loan agreements you can adapt. However, do not under any circumstances allow friends or family to guarantee money that you have borrowed from a formal lender as this could put them at risk.

If there is no one to ask for an informal loan, then is it time to consider a short-term lender. Remember this market has some big brand names and an awful lot of lookalike brand names, so be sure you are dealing with a company that offers clear and fair terms. Then and only then, are you safe to compare costs.


Step 4 – Flog, tarry, avoid

Our top tips of what to look for in a short-term lender are as follows:

1. A postcode that you can tap into CCA search to check that they hold a consumer credit licence. This should read either consumer credit (meaning that they actually lend the money) or credit broker (meaning that they shop around for loans for you). Watch our video if you need help. If you cannot find a licence, they are operating illegally and you can flog their behinds, by reporting them.

2. Look to see if there is a responsible lending policy on the website, perhaps on its own page or the FAQ page. Does this information help you to understand exactly when you will need to repay your loan, how much you will need to repay, how they will collect the repayment and what happens if they cannot collect it. Are you confident that they will check your income, employment and credit history? These companies specialise in difficult circumstances and responsible lenders will check everything first. If all this information is clear, tarry, in other words add them to a shortlist of companies you might use.

3. Check that the Terms & Conditions and Privacy Policy do not force you to accept communications by letter, email, phone call or text from third parties. This allows other people to keep sending you promotions for more loans, insurance, claims and all sorts, so you need to find an opt-out box in the application form before you agree to anything. Terms and policies can be very long and confusing. If you cannot find what you are looking for assume the worst and simply avoid the company.


Step 5 – Keep costs down

It is tempting, when you are applying for a loan to ask for that little bit extra. Remember that short-term loans are not like the easy credit we enjoyed before the credit crunch. For every tenner you add the company will add around £3 more in charges. So if you bump £350 up to £500 your charges will increase from £105 to £150. If you can cut back on your spending while you borrow the cash, you will be better off, so think about the smallest amount you need to borrow, before comparing the charges between your shortlisted lenders. 

And finally? If for any reason at all the company cannot collect your repayment, contact them immediately to explain or question the problem. If the problem is yours contact an independent advice agency also. For ease, try National Debtline, or the links in these posts.


Author, Emma Bryn-Jones is the founder and a director of the Zero-credit Coop.

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Thursday, 26 January 2012

Payplan's Payday Plot - the story behind the stats...

Payplan’s recent survey of its customers and online communities will no doubt have the statisticians up in arms. In the first week of December, John Lamidey, of the Consumer Finance Association, wrote off R3’s research as unreliable because he said the sample sizes were small.  

John is right, of course - people who use payday loans are a minority and debt focused organisations, like Payplan and R3, would like to keep it that way.  So, setting the arguments aside, what does Payplan’s survey tell us about people struggling with payday loans?



One in three in Payplan’s survey had used a payday loan
Payplan is one of the largest providers of debt solutions in the UK. As such, when 707 customers, fans or followers complete an online survey, you can be reasonably sure that the results are broadly representative of the people Payplan helps - they have problem debts. 

2011 saw significant increases in payday debt problems, not only reported by R3. For instance, National Debtline said payday problems had risen from 200 to 1200 calls a month between October 2010-11. With difficulties increasing on this scale, we need to consider the issues that Payplan’s survey found.  


Responsible lending deserves due credit
Responsible lending is at the heart of a credit agreement because it reduces the risk of debt. John Lamidey won’t argue with that and neither will Stella Creasy MP, who leads the campaign to cap high cost credit. Responsible lending can be summarised as:

transparency - the lender is not misleading or oppressive in advertising or selling credit 
affordability - the lender makes a reasonable assessment of the consumers’ ability to repay 
informed choice - the lender explains the key features of the credit on offer
terms & conditions - the lender ensures that terms and conditions are fair, clear and intelligible
suitable credit - the lender does not trivialise credit, treating vulnerable people unfairly 


Were lenders responsible to Payplan’s payday debtors?
You decide...

86% - used the money for essentials including food and paying bills
If you agree that borrowing to put food on the table, stick a quid in the meter, or keep a roof over your head makes you vulnerable, then you will also agree that payday loans were not suitable credit for more than eight out of ten of Payplan’s payday loan users.

69% - don’t know the rate of interest on their payday loan
Some lenders may be trying hard to explain the costs of borrowing, but over two-thirds of Payplan’s payday debtors did not understand this and did not make an informed choice.

61% - have taken out more than one payday loan at the same time
Lenders’ terms & conditions should set out the borrowers’ responsibilities to repay. However, almost two thirds of Payplan’s payday debtors were able to apply for several loans at once because credit reports for payday loans update very slowly. 

56% - over half owe more than £500 to their payday loan lenders
£500 is just under a third of the average monthly take home pay. Payplan’s payday debtors probably had other debts, because so many were paying for essentials with payday loans. It is unlikely that the affordability of their borrowing was properly assessed.

47% - have taken out six or more payday loans in the last 12 months
Almost half of Payplan’s payday debtors borrowed frequently to pay for day to day needs. This indicates a growing dependence on credit that raises questions about the transparency of payday advertising. 


Payday lending has a debt problem 
Where people differ is in deciding who takes responsibility - the lender, the borrower or both. We could argue, of course - quibble over facts and figures, while the number of people using payday loans cracks on apace. Or we could discuss how to manage this new lending phenomenon safely. Now, who doesn’t agree with that?

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Monday, 16 January 2012

Instant Loan For Unemployed? Bad luck Wonga!


So, it's 6.30am and I'm catching up with e-mails for the week ahead... I use g-mail.

I'm so accustomed to ads targeting my credit interests, that I rarely look at them these days.

It's just bad luck for Wonga that this morning I caught them out.

Kinda hard to brush that one off as an old SEO tactic, hey? And yes, it does link through to sliders.

You know, I don't jump for joy when I find stuff like this. It makes me sad, bitterly, bitterly sad.

I want to know when it became okay for financial services to lie?

I want to know what the hell anyone ever did, that meant it was okay for you to exploit them when they're down?

I want to know how you feel about the kids, turning up to school, unable to admit that mum and dad are in bits because there's no food, no electric, and soon to be no home?

I want to know these things because once upon a time, I was that kid and I'm telling you now, nothing ever takes that pain away.

Do NOT mess with people, Wonga. We are many, you are few and you too have kids. We can can do so much better than this.


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Thursday, 12 January 2012

How Wonga can an apology be?


#duecredit @MartinSLewis @StevePerry2011 @stellacreasy - Wonga replaced their Student Loan page with an apology, yesterday.


"In fact, the main purpose of the content was search engine optimisation, or ‘SEO,’ which is a common practice for any internet business that wants to appear in searches for relevant subjects."

Let us be clear that search engine optimisation, or "SEO" is the means by which a company that is online targets specific consumers. When creating this page, Wonga made a conscious decision to target students and to appear in relevant searches for Student Loans. It is nonsense to claim, as this apology does, that:

"No-one was directed to this page, nor was it prominently promoted on the website."

Search engine rankings do not require pages to be prominently promoted. The whole point of SEO is that online marketers can direct people to pages through the careful selection of keywords that consumers are likely to use when searching for goods and services.

Moreover, to state that no-one was directed to the page remains inaccurate, as there is a permanent link to it in standard footer menu for the website. Indeed, the Wonga Student Loan page has a link from Wonga's Responsible Lending page, in precisely this format.

Most commonly, standard footer menus include important information like FAQs or Terms & Conditions, so consumers do look for and re-directed by them. Some companies use standard footer menus to raise the profile of all the goods and services they provide, because this ensures that they appear on every webpage.


Profiling goods and services in a standard footer means that there is not one single page on a website from which the consumer cannot be directed to a specific product page - clearly, Wonga's approach to website navigation and SEO. However, by placing this standard footer menu beneath all of its significant achievements, Wonga is also attempting to associate its products with the reputable organisations that recognise the company.

To be fair to Wonga, the company uses a great many tools, tactics and strategies that are common to online marketing. The question is whether these methods are appropriate, when an increasing number of consumers are searching for short-term lending to meet basic living costs, or to service unmanageable debt.

The growth in payday lending is significant, rapid and quite the reverse of any other sector in the UK economy. For this reason alone, it demands our attention. Claims that such lending is fuelled by and essential to lower income households alone, seem to ignore the likelihood that growth on this scale can only be accounted for by a growth in the number of consumers.

Since 2008, Zero-credit has warned that the target market for short-term lending is middle income earners - people who are too frightened, ashamed or proud to admit to a money problem and to seek help. This is tragic when consumers have personal debts to the tune of £1.5 trillion and, rightly or wrongly, austerity measures affect us all.

It is perfectly normal to be struggling in 2012.

All the more reason for Wonga to stop being so naive and to start recognising that it is part of an industry that is actively promoting borrowing as an alternative to seeking advice. As for the trade associations that promote standards for short-term lending? When they have codes of conduct, training, qualifications and audits that match those of Advice UK, The Institute of Money Advisers, the DRF, DEMSA, R3 or the APDSI, only then may they start to take the moral high ground.

[youtube http://www.youtube.com/watch?v=b_zoDby2eEo]


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Thursday, 5 January 2012

So, MoneySupermarket?

Googlesearch, less than five minutes ago, delivers this sponsored link...

So, who in the media is going to take the plunge and hold MoneySupermarket to ransome?

Paul Lewis at the beeb - we told you about this kind of activity a couple of weeks before Christmas...

Martin Lewis, care to drop them from your recommended suppliers?

CCCS bold enough NOT to blog on their website?

Must we all just shimmy along pretending that payday prey are other people?

SO superficial...

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