Debt Consolidation, Debt Solution, Debt Relief

GREECE’s troubled economy may preclude the Australian home-owners from being subjected to another interest rate hike when the Reserve Bank board meets next week.

Despite  growth in prices and overall inflation rising 0.9 per cent over the March quarter, leading economists now believe that the RBA will play it safe and keep its cash rate at 4.25 next week.

Global markets were thrown into panic mode yesterday after Greece’s credit rating was condemned to “junk” status, making it near-impossible to pay back its $430 billion national debt alone.

Greece now faces a do-or-die May 19 deadline when the nation needs to pay back $12.5 billion, or become the first member of the European Union to default on its loans.

The credit agencies also went after Portugal yesterday, downgrading its rating amid concerns its national debt might also spiral out of control.

The RBA will undoubtedly take the European situation into account when considering the future of interest rates in this country.

“The lessons from the surprise pause in February, which was we believe significantly influenced by the surprise developments in Greece, probably signal that with rates so close to the normal level the bank can afford to wait until June,” Westpac chief economist Bill Evans said.

While on one hand citing yesterday’s inflation figures as cause for concern for the RBA, ANZ economists also claimed the cloud over Europe’s finances would dictate the outcome of the board meeting.

Interest rates were raised 5 times within a 7 month period by the RBA,

There is a higher chance of RBA putting the interest rates up in May.  The main reason for this is the higher than expected inflation figure.

According to figures released by the ABS, inflation has grown by 0.9%

That is slightly higher than the 0.8 per cent rise analysts had predicted and lifts the annual inflation rate to 2.9 per cent.

Given that the Reserve Bank prefers to keep inflation under 3%, the chance of a rate rise is certainly higher.

Increase in the cost of fuel, pharmaceuticals and finance was the main reason for price increases noted.

The most significant price falls were for furniture, fruit and domestic holidays and accommodation.

If you are looking for an unsecured personal loan while there is some bad credit history on your credit report – unfortunately you are wasting your time.. These days such loans simply do not exist.  All bad credit loans require some form of security – eg. a house or a car.  However even if you are able to offer some security for your debt consolidation loan this does not at all guarantee your approval.  With home loans – you will not be able to borrow more than 80% of the value of your security property.  If your current home loan is already at 75% and you wish to consolidate further debts into it…..most non conforming lenders will turn you away.

If you are looking to offer your car as security, the car must be worth more than double of the amount you wish to borrow.  For example if you need to consolidate $25,000 in unsecured debts,  your car must be worth at least $50,000 and be unencumbered.  This is rarely the case.

The  other option in unsecured bad credit debt consolidation – is a Debt Agreement. With a Debt Agreement your debts are negotiated on your behalf with your creditors and you end up paying a reduced amount each month until the debts are fully paid out.

Much has been recently reported in the media about the high level of personal debt carried by most Australians.  While at face value the figures do not look good, it is important to remember the distinction between good debt and bad debt.   If most of your dent is good debt, high gearing may not necessarily be a problem.

Home Loans, Investment Loans and other Mortgages are known as ‘good debt’ because they are taken out to hold ‘growth assets’.

Car Loans, Credit Cards, Hire Purchase loans and Personal Loans are generally known as ‘bad debt’ or ‘lifestyle debt’.  These loans cost you money but do not contribute to your growth asset base.  There is no need to be concerned that 40% of your income is going towards your debts as long as these re your mortgage debts.  Excessive debt levels for lifestyle items is wasteful and should be avoided.

A Melbourne based legal service has developed a guide aiming to assist young people about keeping out of debt.

Expensive ringtones, car loans and credit cards are making it harder for many young people to stay out of debt. There are just too many temptations to spend more than one can afford.  Young people lack the experience in dealing with all the temptation of easy credit.  Many take on thousands of dollars of debt without any concrete security for the loans.  Most young people do not understand the difference between good and bad debt.

The service is based in St Kilda expects the guide to help young people avoid a bad credit rating.  It offers a number of realistic examples including ways of managing the high cost of mobile phones, and car loans.

AUSTRALIANS will have to find an extra $3000 by this time next year to cover living expenses as the costs of everything continues to go up.

The greatest hurt comes from greater home loan repayments as well as higher cost of utilities such as gas and electricity.  Home loan costs are higher still for people with some history of bad credit. Ex-bankrupts consider themselves luck to qualify for a home loan with rates over 9%.

The pricing regulator IPART has announced yesterday that it would allow gas providers to charge standard customers in Sydney and surrounds an extra $46 in 2011-12, up 7.4 per cent.

People living in Canberra will face a rise of $52 or 8.9 per cent, while Country Energy customers would pay $73 more, a 12.7 per cent rise. At the same time, average households will face power price surges – even without an ETS – of $217 to $412, depending on where they live. And most will pay at least $64 more for water.

The impact of utilities rises will only be surpassed by growing costs of holding a home loan.

A typical home loan borrower can expect to pay an extra $2400 in 2011-12 for their home.   This is further aggravated by home loan rate increases outside the increases by the RBA,  Each additional 0.1 per cent adds $250 a year to repayments on a $300,000 loan.

When combined with other anticipated increases, such as health insurance ($174), workers on the average wage of $63,600 will lose three weeks pay to cost of living increases. They would need a 7 per cent raise – a pre-tax increase of $4300 – just to avoid falling behind.

YOU don’t have to be rich and famous to fall victim to identity theft but there are simple steps we can take to protect our personal information.

“Identity theft can hit anyone,” says Australian Competition and Consumer Commission deputy chairman Peter Kell.

“It’s important to understand that identity theft may actually involve people stealing your identity to use as a scam to perpetrate on others.

“Identity theft can involve using your personal financial information such as credit card details to undertake other sorts of fraud or it can involve directly seeking to steal money from you.”

Kell says people should be particularly careful about the information they share on social networking websites, and also remember that a legitimate financial institution will never send an email asking you to follow a link or provide personal banking details.

Australian Securities and Investments Commission senior executive leader for financial literacy Delia Rickard says identity theft is on the increase and involves organised crime groups.

She says people should be aware these criminals may not be after your immediate assets, but they may use your identity to set up bank accounts, apply for credit cards and run up huge debts.

Rickard says some of the simple things people should remember every day to protect themselves are: Don’t do internet banking on public computers; make passwords hard to guess; log out of internet banking sites when you’re finished; lock your letterbox; and shred personal correspondence before throwing it out.

“It’s tragic but true people go through other people’s rubbish these days in order to steal their details,” she says.

And if anyone phones claiming to be a financial institution and asking for personal details, hang up and contact the financial institution using a number from a statement or the phone book.

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SOME 79,000 customers have been identified from data stolen from a Swiss unit of HSBC bank, a French prosecutor said overnight, citing a far higher number than previously made public.

The chief executive of HSBC Private Bank (Switzerland) said last month that details on 24,000 bank customers may have been leaked in the theft three years ago by an IT worker at the bank.

However, French prosecutor Eric de Montgolfier said the stolen files, which have now been decrypted, allowed for the identification of 127,000 accounts belonging to 79,000 people.

He said that “8231 French account holders have been identified.” About 7000 Italians also appear to be concerned, Mr De Montgolfier said.

The major security breach has helped fuel pressure on Switzerland over tax evasion.

French authorities in January 2009 acted on a Swiss warrant and seized HSBC customer data from former computer specialist Herve Falciani’s home in France.

They then said they intended to investigate suspected evasion by French taxpayers with secret Swiss accounts.

French prosecutors have since opened an investigation into money laundering and authorities have used the data to identify suspected tax cheats.

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A CANADIAN Islamic financial institution is launching Canada’s first “halal-approved” credit card this month and will also offer it to US Muslims by year end, its president said today.

The iFreedom Plus MasterCard meets the requirements of Sharia law, which prohibits usury, by being prepaid and therefore interest-free, said Omar Kalair, president of Toronto-based UM Financial.

“Trade is allowed, but usury is not,” he said.

A similar card is already available in Britain, but nowhere else in the West, he said.

Until now, devout Muslims in Canada have either had to do without credit cards or paid off the balance each month to avoid interest charges that go against their faith.

Three Islamic finance experts said the card “complies with Islamic laws and Muslims can avail of this product”.

Of course, non-Muslims may want one too, Mr Kalair said.

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THE total value of credit and charge card transactions, including advances, rose by 6.05 per cent in February, Reserve Bank figures released show.

Australians spent $18.2 billion on their credit and charge cards, compared to $17.1 billion in January, according to the figures which are not seasonally adjusted.

Total credit and charge card balances outstanding increased by 2.1 per cent to $47.124 billion from $46.152 billion.

Balances outstanding rose by 5.18 per cent over the past 12 months.

The average credit card account balance increased by 1.9 per cent to $3250 in February from $3189 in January.

The average credit card account balance in February was 3.29 per cent higher than a year earlier.

Credit and charge card card repayments fell by 4.7 per cent to $17.716 billion in February from $18.593 billion in January.

Repayments in February were up by 5.5 per cent from a year before.

By value, credit card purchases increased by 6.1 per cent to $17.321 billion in February from $16.322 billion in January and rose by 7.1 per cent over the year to February.

The value of cash advances on credit and charge cards rose by 4.8 per cent to $896 million in February from $855 million in January and were down by 6.95 per cent from $963 million in February 2009.

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