Why payday loans could save you money long term.

Payday loans have often been in the spotlight and have received their fair share of bad publicity and news due to some lenders charging high interest rates and unrealistic repayment terms. Since the FCA stepped in to put a tighter grip on the payday loans industry, many lenders have been left with no option but to change their borrowing terms to suit customers or risk facing a huge financial penalty/fine.

There have been a number of high profile penalties and fines to various payday lenders with the most notable being issued to the UK’s largest lender, Wonga. Wonga were forced to write off more than 330,000 payday loans to UK consumers, due to their manipulative interest rates and charges that left many customers in greater financial difficulty. The total fine that was issued as a result was over £220 million and was used to pay compensation to previous Wonga customers who were financially hit by charges and interest rates.

Since then, the payday loans industry is more competitive than ever with interest rates being lowered with immediate effect. Payday loans are currently at their cheapest, and it is thanks to all of the lenders that are currently battling for customers that interest rates are as low as they currently are. Not only have interest rates on payday loans been made more affordable, but the repayment terms have also changed massively. Instead of having to pay the full cost of your loan back in a big lump sum on the agreed date, many lenders now allow you to spread the cost over 3 months with 3 equal monthly payments. This makes the repayment process easier as a customer does not have to ensure they have the full amount in their bank account, instead they have up to 3 months to repay the total loan cost, similar to the repayment process on a personal loan.

The biggest benefit of a payday loan is that you can borrow exactly how much you want for the exact amount of time that you need it for. There is no need to borrow a larger amount for a longer period of time, resulting in unnecessary interest charges and fees. Personal loans do tend to have lower interest rates, however they also have minimum borrowing amounts and payment periods, usually a minimum of 6 months.

Although the interest rates may prove to be cheaper than a payday loan, in many cases you are forced to borrow a larger amount due to many lenders only offering minimum borrowing amounts of £1000 over a minimum of 6 months. Payday loans are now becoming extremely flexible in the way that you can borrow as little as £50 up to £2000 over the space of 3 months. Many people are now turning to payday loans as opposed to personal loans due to their short term borrowing solutions and amounts that can actually help you save money rather than borrowing a larger amount that what is actually required.

In addition to this, a personal loan is usually agreed with yourself and a lender, most commonly your bank and takes on average 2 weeks to receive the funds. On the other hand, payday loans online can be agreed and transferred into your account in just 15 minutes, which is why they prove to be so popular with UK consumers.

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What the falling value of the Pound could mean for you

how to save money on your food bill - payday pixie

We have all heard it in the news, the value of the pound is at a record low due to the recent Brexit vote. Major companies specifically large corporations operating within the food industry have already threatened an increase in prices which will effect some major brands. Earlier this month Tesco had a well publicized stand off with Unilever, the manufacturer of a number of global products such as Lynx, Persil, Marmite, Dove, Flora etc who threatened a 10% price increase due to the low value of the pound which has recently chipped into their profits. Unilever stated that due to the pound dropping so significantly, they were now producing and selling some products at a loss, although it is not known how accurate this statement actually is.

Unilever may be the first company to threaten a potential price increase but will not be the last with Nestle recently threatening to do the same. Nestle, the company that brings us a vast range of products ranging from cereals, drinks and confectionery items such as KitKats have today admitted that they may be “forced” to raise their prices if the value of the pound continues to fall.

Many large organisations will be able to take a hit on profits for certain periods for a short while whilst the pound increases in value, however if this does not happen it is likely that brands that are so popular with UK consumers will soon be available at a higher cost.

It is already estimated that more than 45% of UK consumers will use alternative methods of finance to purchase weekly groceries with the most common methods being credit cards and payday loans online due to their easy repayments and small borrowing methods. With this many people already struggling to purchase everyday necessities such as food and drink, the potential increase in prices for many of Britain’s most popular brands could have a bigger knock on effect than first thought.

Should the price increases that are being threatened take effect there are a number of things that British consumers can do to save money on their weekly food bill. Many supermarkets will offer alternative to big brand products which come at just a fraction of the cost. Alternatives can help prevent the cost of your weekly food bill increasing in line with the price increases of big name products.

The reality is that the 45% of consumers that already turn to alternative finance in order to complete their weekly grocery shopping will increase further as the demand for own branded confectioneries such as Tesco, Sainsbury’s and Asda own branded products will increase in popularity which is again likely to come with some sort of price increase.

There is always a knock on effect when it comes to price increases, although their may be an alternative cheaper option, with popularity comes a price increase which again directly impacts UK consumers which will force a larger number into borrowing alternative sources of finance due to the constant increases in living costs.

 

 


Pension Scheme or Property Investment? Which is the best plan for retirement?

property-or-pension

Company pension schemes used to be the backbone of every large organisation and was seen as a major driving force to attract the best talent and more employees. Company pensions were made up of your monthly contributions and were usually strengthened by your employer adding a small contribution into the pot. Your pension contributions were taken out of your monthly salary before any Tax and NI had been deducted from your payslip. Company pension schemes were once seen as the lifeblood of the UK workforce with many people actively paying into their pension pots on a monthly basis in preparation for their retirement.

Are company pension schemes still as valuable as they used to be?

The UK economy has undergone some massive changes and growth within the last 30 years with more businesses and jobs than ever before. In an industry that is dominated by massive corporations and banking organisations it is becoming more and more rare for an individual to commit their whole working life to a single organisation which used to be the case 30 years prior. With that in mind the numbers of individuals using a company pension scheme have dropped significantly due to regularly opting for changes in job roles and organisations.

Many people regularly change companies in order to climb the career ladder which means less people are choosing to enroll on their own companies pension scheme simply because they do not know how long they will be working with that particular company for. These types of pension schemes work fantastically for long term employers but for the majority of people who change jobs every so year, there are other popular alternatives such as property investments.

Over 50% of Brits think that property is a better investment than a private pension scheme.

As much as 50% of working Brits believe that investing in property instead of a pensions scheme will be a more valuable investment. With less people opting to pay into a pension plan more brits are turning their hand to property investments with buy-to-let the arrangements the number one choice. Imagine you put £2,000 into your pension pot every year (average) in the hope that in 30 years time you will have £60,000 worth of savings in your pension. Now imagine putting a 10% deposit (current lowest deposit rate) of a £200,000 house which works out at £20,000 of savings and renting this property out for 25 years. When it comes to selling the property, not only will you get your £20,000 investment back, but the full £200,000 mortgage of that property would have been paid off thanks to the numerous tenants who would have rented it during that 25 year period.

Taking this into consideration, a £20,000 investment over the space of £25 years has just generated you a £200,000 pension pot, which completely outweighs the value of a private or company pension scheme. Property investments are a long term plan, gone are the days when you could buy a house, fix it up and sell it for a £25,000 instant profit. Investors are now choosing to purchase property and sit on their investment for 25 years and sell it for a massive return.

Depending on the area you choose to buy a house there may be a chance that the monthly rental value of that property alone can bring you in an additional annual salary. However if the rental value is just enough to cover the costs of the mortgage, the benefit is that your mortgage will be gradually being paid off without you having to contribute to it, which is the number one benefit of the buy-to-let industry.

From a pension point of view, purchasing property will give you the greatest return on your investment. Having another property to your portfolio also adds that extra bit of financial security should your family need to rely on this before you retire. Planning ahead and purchasing a property will be the best alternative should you choose not to take out a private pension.

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Credit Card Protection and how it works

credit cards protection chargeback

Credit card protection

Paying for an item/product by using a credit card comes with useful legal protection if you don’t receive your items ordered for what ever reason. Whether it be as simple as the order not being delivered to your chosen destination or that the company has gone bust, you may be liable for a refund payed directly from your credit card company which acts as a sort of payment compensation.

Your rights when making purchases

If you use your credit card to buy things such as a holiday, trip away for a long weekend or even just general goods costing from £100 and ranging to £30,000 you are in fact covered by ‘section 75’ of the Consumer Credit Act. This means that the credit card company actually has equal responsibility with the seller if they fail to deliver your items or fulfill the contract. This means that you will be entitled to a full refund by your card provider should the seller fail to fulfill what was paid for.

Spending limits

The minimum and maximum spending limit for you to qualify for protection from your credit card company is £100 to £30,000 and anywhere in between. For the £100 minimum this applies only to items and sets of items that you buy and not the total bill. So if you were to buy a pair of jeans and a coat both costing below the £100 margin each then this would not qualify for the consumer protection.

Deposits paid via credit card

You will be eligible for a credit card charge back even you have paid a small portion of the cost on your credit car and have opted to split the payments between 2 different methods. As long as your credit card was used in order to contribute to the total payment, you could still be entitled to a credit card charge back. An example of this could be that you buy yourself something worth £500 but used your credit card to only pay a 10% deposit and the rest using another chosen payment method. You would still be covered and not only on the 10% paid via credit card but you would be able to claim back the whole £500 if the items were faulty or delivery failed to reach your destination.

Holiday cover

If you book a holiday using your credit card weather paying in full or just the deposit as long as it cost between £100 and £30,000 you may be able to make a claim against your credit card company if the holiday company goes bust, airline company goes bust or if you feel that you were mislead and missold a holiday that failed to meet the description or promises of the provider. But be sure to check what is and isn’t covered, Payday Pixie have listed this below.

Covered:

Full cost of your holiday if the holiday company you booked with goes bust.

Additional expenses, there is a chance you’re entitled to more. For example if the airline you booked is cancelled and you have had to buy new flights at a greater expense, to get back so remember you’re not only limited to the cost of the original purchase.

Full cost of your flights if the airline company you’re due to fly with goes bust.

Not Covered:

Any costs that you made out of choice. As a consequence of your flight being cancelled you are likely to spend more money on things such as food and drink, these costs are not covered by section 75 of the consumer protection act.

If you buy your flights from a travel agent, being a third party you may not always be able to make a claim because they are only contracted to provide you with the tickets and not the flight itself.

Making claims on purchases made by credit card

If your items haven’t arrived or arrive and are faulty then the first step you need to take is trying to contact the company you bought the items from, if the company doesn’t get back to you or doesn’t give you a refund then you will need to contact your credit card company and make a claim against them. Contact the credit card company informing them what it was you bought, how much you paid, which company you bought it from and how long ago you made the purchase along with proof of payment e.g. Copies of receipts.

Let them know that you have already tried to contact the company you bought the goods from and the outcome of their response weather they said they’re not refunding you or if they even got back to you at all. Explain to the credit card company that you would like them to refund the price of the goods onto your credit card and make sure you state that you’re making the claim under section 75 of the Consumer Credit Act. Make sure you keep copies of all emails or letters you have sent.

By ensuring that your purchases are covered by the consumer credit protection act, you are protecting yourself against an form of fraud and cyber theft. Credit cards add the security that many other forms of online payment gateways can not provide, and always ensure that as a consumer, your finances and personal information are protected against scammers.

 


Payday loans in the run up to Christmas

Payday loans at Christmas time

Payday loans in the run up to Christmas are always at a rise, people turn to payday loans during this period wanting to buy all the presents before the Christmas rush of last minute buying and not knowing if they will be able to obtain the present in mind due to rise in sales and items being sold out.

Although we advise you to look elsewhere for money before taking a payday loan they’re always a handy option to have as long as you’re capable of keeping track of your finances and making repayments when due.

Figures show that adults spend an average of £700 over the festive season with spending exceeding £25 billion in December alone, numbers such as these may look like the UK is throwing money out during the Christmas period but this number is actually showing a decrease year after year.

On average 3% of us will us turn to payday loans to fund our festive spending out of the £25 billion + with as little as 23% of short term borrowers using this to fund their festive spending the remainder use the short term funding to pay for house hold every day expenses such as electric, gas and water bills.

Due to easy borrowing, no credit check and reasonable APR along with other benefits lenders have found loyal clientele with a steady stream of returning customers through out the years.

This can be a very good option to a lot of people over the Christmas period especially those with families but not only for presents, due to Christmas breaks from work a lot of people like to make the most of the festive season weather it be going out and enjoying the time off or having a short break or holiday abroad these things will always come into mind at the time of the year hoping to end it with good memories before opening into a new year.

Although borrowers will use payday or short term loans for such things as holidays we don’t recommend you to use the funds for none essential purchases yet use the funds for essential everyday expenses like water and heating bills.

The media has criticised that payday loans are more commonly used to cover the non-essential expenses related to spending on Christmas food and gifts, holidays, repair works, unexpected bills, outstanding bills, or just to even out a shortfall between paydays.

However reports show that 22% of payday loan borrowers use these short term loans to cover the cost of their festive spending, the remaining borrowers use thief loans to cover expenses such as water and heating bills.

Here are some tips to help with money worries over the Christmas period.

1. Fix your budget
Write down a list of what you feel is a realistic budget for yourself to be able to afford and try to keep money aside to give yourself a head start on the bills which need to be paid in to mid January.

2. Temptations
Try to stay clear of the tempting offers the shops have up for grabs and only buy the things you’re actually in need of for your festive meals another option is to shop online as you’re less likely to get side tracked by offers on the shelves and search for what you actually need, using home delivery will also save on fuel and the panic or impulsive buys.

3. Increase Christmas fund
Make a start on saving towards your Christmas budget now so come the time you’re not worried about having to all of a sudden get the money together.

4. Online shopping
Shopping online instead of on the high street can be noticeably cheaper so keep an eye out for discount vouchers in newspapers and online. Be sure to check the delivery charges are included in the cost at check out.

5. Stock and freeze
Eat the food you have in your freezer now to try and clear the space to stock up on freezable Christmas goods. Buying foods now and freezing them will spread the cost over time so you won’t feel a big hit when stocking up on Christmas and Boxing Day essentials this also reduces the stress of having to buy everything at once just before the big day and self insures you that you have everything you need instead of rushing and hoping they still have it in stores.

6. Store credit
Try staying clear of a store card credit if the high street store offers you one upon paying, although on the surface it seems a good deal with the impressive discounts they tend to come with extortionate interest rates

7. Plan ahead
Delivering the more local Christmas cards personally and then sending the further others second class will save you some money instead of choosing first class delivery last minute. Second class delivery has a deadline of December 18th so get them sent out earlier and you will have the extra cash left to spend towards other things over the festive season.

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