Moneyadviceforu

Northwest Consultants said today that income insurance is not a necessity for everyone, but it may be very important for some.

Harry Katz, principal independent financial advisor (IFA) for the firm, suggested that people should think about what would happen to them if they could not work and then decide whether they need income insurance or not.

If, for example, it is likely that a person’s house will be repossessed if they are unable to work then he says income insurance “looks cheap, because contemplating what would happen if you didn’t have it doesn’t bear thinking about”.

However if the person’s partner earns enough to support the household then income insurance may not be something that is needed

Mr Katz advocated “saving money for a rainy day” as the best solution, but said that current spending habits make this an unfeasible solution for most people.

A recent survey from financial services provider Axa found that 20 per cent of Brits currently have income insurance, but high numbers of people in the UK have life insurance policies.

UK House prices fell by £4,000 (2.1%) in January 2008 (Halifax), the average price falling to £191,275, down £9,806 (4.8%) from the August 2007 peak of £201,081.

The Market Oracle forecast as of August 2007 is for a fall in average house prices of 15% over two years to August 2009.

UK interest rates were cut yesterday by a further 0.25% taking interest rates down by 0.5% from its peak of 5.75% (Forecast December 2006), the cuts to date and further anticipated cuts during 2008 are being mistakenly taken by many market commentators, economists and large mortgage banks such as the Halifax to imply that UK House price inflation will be neutral during 2008.

Therefore this article illustrates why house price inflation will start going negative by April 2008.

Egg credit card holders who have had their accounts cancelled were today told the move would not have a detrimental effect on their credit rating.

Credit reference agency Experian said 160,000 customers who have had their cards withdrawn need not be concerned about ending up with a black mark against their name.

It said cancellation of a card by the issuer would be recorded on a credit report as a “settled” account, once any outstanding balance had been cleared.

Any lender checking the customer’s record in future would not see the name of the card issuer, only that the card had been settled.

This is the same as if the cardholder had cancelled the card himself.

James Jones at Experian said: ‘[Lenders] all make their own decisions on whether they want to grant credit or a credit card, based on credit reference agency information and other information provided by applicants.

“In fact, depending on the circumstances of the individual and policies of the lender, it could have a positive effect on your credit rating as a lender might view an application from someone with a lower number of cards as more attractive.”

However, Neil Munroe, external affairs director at credit reference agency Equifax, said the decision by egg was indicative of a general tightening of credit across the UK and consumers could still have problems applying for cards even if their records were perfect.

He added: “Knowing that a consumer will be able repay the credit extended is obviously the number one criteria.

“But I think consumers also need to recognise that lenders need to be able to make money as commercial organisations and, therefore, they will also look at customers from a profitability perspective.”

Consumers could save over £500 a year by switching to a more competitive deal on financial products like loans and insurance.

A study by MoneyExpert.com found that the average household could save an impressive £547 per year by switching to more competitive financial deals.

Almost half of this saving (£204 per year) could be from opting for a better interest rate in an unsecured loan, the study added.

What’s more, the research indicated that only 16 per cent of all households had managed to secure the best possible deal on five important financial products.

“With everyone coming under increasing financial pressure from rising bills it makes sense to find every possible way to cut costs,” commented Sean Gardner, the website’s chief executive.

“Typically, UK consumers are paying out £150 per year more than they need to. I’d urge people to spend just a few minutes online to review their finances.”

Recently, Rachel Lacey, editor of Moneywise personal finance magazine, suggested that consumers could think about using an unsecured personal loan to consolidate existing debts.

Over five million people in the UK do not know what should be covered by a standard holiday insurance policy, a new report has warned.

Research from MoneyExpert.com found that one in eight people have no idea what to expect in a standard travel insurance policy.

The company added that not knowing the details of insurance cover could mean holidaymakers lose out when they need to claim.

Consumers were unaware of such details as the amount of medical cover they are entitled to and whether they are insured or not if they lose their passport.

Sean Gardner, chief executive of MoneyExpert.com, explained: “With people travelling to increasingly exotic destinations and keen to do ever more adventurous activities while abroad, it’s a worry that many don’t understand what they’ll be covered for.

“Obviously a white water rafting holiday poses more of a risk than a beach holiday in Spain so it’s vital that people consider exactly what activities they’re going to be doing, and then choose their policy accordingly.”

Recently, the STA said that people needed to be aware that there is more risk involved with adventure holidays or long-haul trips, which meant that holiday insurance premiums would be higher for these people.

U.K. home values fell for a third month in January, the longest stretch of declines since 2000, and the housing market will cool further as demand from property investors wanes, Nationwide Building Society said.

Prices declined 0.1 percent from December, when they dropped 0.4 percent to 180,473 pounds ($359,000), Britain’s fourth- biggest mortgage lender, said today. From a year earlier, values rose 4.2 percent, the least in two years.

Home-loan approvals fell to the lowest in at least nine years last month as higher borrowing costs and a curb on lending helped drag out the worst housing slump for more than a decade. A slower market will go “hand in hand” with weaker consumer spending, Bank of England Governor Mervyn King said last week.

The mortgage data “undoubtedly signals a continued cooling in annual house-price inflation,” Martin Gahbauer, a senior economist at Nationwide, said in a statement. “New demand from buy-to-let investors is likely to weaken in 2008.”

Consumers, already burdened with record 1.4 trillion pounds of debt, face higher costs for loans after banks around the globe posted at least $133 billion in losses from the collapse of the U.S. subprime mortgage market.

Nationwide’s Gold Credit Card and FlexAccount have been awarded a five star rating by financial research company Defaqto.

Defaqto’s reports use a benchmarking process on features and costs to compare and rate products across financial institutions and they found Nationwide’s Gold Credit Card and FlexAccount to be in the top ten per cent of products.

The Gold Credit Card offers zero per cent on balance transfers for ten months and zero per cent on purchases for three months, as well as promising no annual fees and commission free card use abroad.

Unlike most other card providers Nationwide also uses a positive system of payments to ensure the most expensive debt is paid off first when a payment to the account is made.

The FlexAccount, Nationwide’s current account, has been awarded a five star rating for the last four years and provides a competitive rate of interest on deposits and overdrafts, in addition to providing access to e-savings for a high rate of interest.

More than a million people have taken out loans without telling their family or partner about the debt, Abbey Loans has found.

Some 1.3 million people have got a so-called secret loan, with more than half of them saying they are using the funds to repay other debts.

The news comes after the latest debt statistics by Credit Action found that British borrowers pay some £94.5 billion a year in interest, with the average debt per household standing at £56,234.

Abbey Loans’ survey discovered the typical amount borrowed by secret debtors was £5,720, according to Abbey Loans, with the majority of loans for an amount smaller than £3,000.

However, some people’s secret borrowings are more substantial. Abbey Loans found that there are people with secret loans of as much as £50,000.

Paul Morrish, Abbey Loans director, urged people not to take on debt without discussing their options with friends or family.

“Talking about your financial situation with others can help so that you can be realistic about what is affordable,” he added

Many consumers in the UK have made use of credit cards that offer zero per cent balance transfers and purchase rates in order to manage their Christmas bills effectively.

According to Sainsbury’s Bank, zero per cent credit card deals can help most people to keep new year debt “under control” and enable them to clear bills quickly and easily.

Donald Macleod, Sainsbury’s Bank head of cards, claims that nearly two in three Brits expect to clear their Christmas debt by the end of the month, indicating that it is not a “massive problem” for most people.

“Bearing in mind that it’s the busiest time of the year, two thirds of people have their debt all cleared by the end of the month,” he stated. “I don’t view that as disastrous… In the main, it sounds like everybody’s got it pretty much under control.”

Sainsbury’s Bank estimates that 18 per cent of spending over the Christmas period in the UK was put on credit cards, with 61 per cent of consumers planning to pay off bills by the end of January, 15 per cent over two to three months, three per cent over seven to 12 months and one per cent over more than a year.