A new study was released regarding the use of rewards credit cards.  It showed that a number of loyalty cards have increased from 122 from 2005 to 190 in 2008.  This is a 50 percent increase; however, one in four cardholders will actually claim the rewards.  The study showed that 1 in 4 in the last 12 months actually received an award.

This can be bad news depending on the card.  Some loyalty programmes offer a time limit on the collection of the rewards, while others will let them accrue until the person has enough.  The study looked at Sainsbury’s credit cards to find that 35 percent who had credit cards with rewards were offered less than 25 pounds when they did receive their rewards.  23 percent of the consumers questioned stated that they didn’t know how to get their rewards.  24 percent said that redeeming the rewards was too much of a hassle.  The rewards can be redeemed by mail, internet or telephone when there is enough saved up.  You still have to choose something that is within the reward limits and this is where it can get confusing.  It is just easier to have the reward pay the monthly balance rather than try to redeem the cashback option, according to the research.

The schemes are definitely poor in value.  You have to spend over 200 pounds to get the 1 percent cash back accrued to a high enough level to receive it.  Sometimes the rewards that were researched were seen as false value.  The rewards are often worth pounds and pence, but again it takes a great deal of time to get the points earned.

Sainsbury’s credit card with Nectar points is equivalent to 2 percent cashback on Sainsbury’s purchases.  This would mean having to spend 100 pounds every week with the credit card to get 104 pounds worth of Nectar points each year. 

The study is to offer a word of caution regarding the schemes.  As it is seen a consumer must spend 100 pounds a week for the rewards with the Nectar card, which is pretty typical of other rewards schemes.  If you can’t pay off the balance each month you are not any further ahead due to the high rates of interest.  Before using the rewards cards consumers need to look carefully at how the points work.  This may require a call to the credit card company for full disclosure that is not often seen on the internet or the paperwork you receive through the mail.

It all stems from the U-turn by the chancellor on plans to scrap the lowest 10 pence tax band, following pressure from backbench MPs to ease its impact.

The new measures will mean basic rate taxpayers see a tax saving of £120.

They will have £60 less taken from their September pay packets and will then see their net pay rise by £10 per month for the rest of this tax year.

The effective cash-back comes because personal allowances for basic rate taxpayers go up by £600 to £6,035 from 7 September.

Self-employed taxpayers will not feel the benefit until they start paying tax from January 2009.

But so far the tax changes only apply for this financial year.

Critics of Chancellor Alistair Darling’s U-turn say that these tax rebates will also benefit middle-income taxpayers as much as those on smaller incomes.

It will also punch an estimated £2.7bn hole in the national finances as Britain faces a deep economic downturn.

“When the chancellor put this budget together he wasn’t expecting to lose £2.7bn, but I’m sure when he re-jigged his numbers, he will take account of this extra money,” said Chris Jones of tax advisers Lexis Nexis.

“However, what we need to bear in mind, it could be good news for the economy.

“Taxpayers with another £60 in their pocket may well go out and spend it. That could increase High Street profits.

“So it could in some way balance it [the cost of the rebate] out, but probably not to the full amount.”

The 22 million people who are supposed to benefit from this change are the basic rate taxpayers who pay tax at a rate of 20% and whose incomes are below the threshold for paying the higher rate tax of 40%.

This is far more than the 5.3 million people originally estimated to have been paying more tax now that the 10p tax rate has been abolished.
 
The 10p tax band was scrapped by Gordon Brown in his final budget as chancellor before becoming prime minister last year, at the same time as he cut the standard rate of income tax from 22% to 20% from April this year.
As it became clear that this would still leave millions of the lowest paid worse off than before, the government was forced in May to change its policy.

To offset the negative effect of abolishing the 10p tax rate, Chancellor Darling announced that the personal tax allowance would be increased by £600 to £6,035.

To stop higher rate tax payers also benefiting, the starting point for the 40% tax rate has been cut by £600.

At the start of this tax year, the higher rate began at an income of £41,435.

This would have been pushed up to £42,035 as a result of the £600 personal allowance increase, but will now start at £40,835 instead.

These changes to the personal allowance, and the adjustment for higher rate tax payers, initially apply only to the rest of the current tax year.

Employees who look closely at their pay slips will see the changes made by alterations to their personal allowances and their tax codes.

Mr Darling has yet to decide if, in his Pre-Budget Report this autumn, he will make any further changes to personal tax allowances next year or simply leave things as they are.

To play on the safe side you should take steps to protect yourself and secure your assets as there are plenty of events that can lead to losing them:

• A negligence or injury claim that exceeds any insurance coverage you may have.
• Lawsuits from disgruntled business partners or employees.
• Claims from creditors should your business fail.
• Breach of contract through no fault of your own.
• Catastrophic medical bills.

One of the surefire ways to protect your assets is using corporation services in Nevada. You simply buy a Nevada Investment Holding LLC and transfer your assets to it. Spending some $ $ to do this can save you a fortune if something happens to your business in future.

The first and most popular form of debt consolidation is known as debt counseling or debt management. It involves using a third party to restructure your bills into an affordable payment. By doing so one can avoid late fees which will make paying off debt nearly impossible.

Another option is debt settlement or debt negotiation. This is a new type of debt management. By speaking to a debt consultant one can get information about filing bankruptcy and the costs of doing so. Both have disadvantages from a credit standpoint, so make sure to ask about these consequences.

If you would like to learn about the possible ways to pay off your credit cards fast with one of these plans, look online for an objective resource. One great site to go to is PayingPaul.com – the site about getting out of debt without “Robbing Peter”, or getting a loan.

Among potential measures to boost the housing market could be allowing buyers to defer the payment of stamp duty.

But readers of the BBC News website said that the uncertainty had caused problems for their transactions.

The government has denied that any proposals have been put forward at all, saying the stories are conjecture.

‘Backfired’

After having his property on the market for several months, Richard Bell was due to exchange contracts on his Windsor home on Friday.

But after reports appeared in the media of a possible stamp duty holiday, his buyer has asked to delay completion until the stamp duty situation is clarified.

He is angry at the way the government has handled the situation.

“Their crumb of comfort has backfired,” Mr Bell told BBC News. “It has stopped the sale in its tracks.”

“They really haven’t thought about the implications,” he said.

‘Killed off’

Chris O’Brien from Swansea said he thought the speculation would “kill-off” the housing market until the details of any changes were confirmed.

The stamp duty on the home he is due to exchange contracts on will be more than £8,000.

But he won’t now be signing on the dotted line until the government makes a decision one way or another.

“I don’t want to sign one day only to find that stamp duty has been abolished the next.

“The Chancellor needs to make a swift decision,” he said.

Going ahead

Mark Phillp and his fiance thought about delaying their home purchase until the situation was clearer.

They agreed to go ahead, but it was a difficult decision.

“We really didn’t know what to do,” Mr Phillp told BBC News.

“Do we hold off and risk losing the house or go for it and risk losing the £8,000 in stamp duty?”

They are now hoping that any announcement comes in the next fortnight before they exchange contracts.

The Conservatives have written to the Chancellor calling for an end to such doubt.

However a Treasury representative insisted that no decisions have been taken on changes to stamp duty.

“Recent news stories suggesting the government has put forward a proposal on stamp duty are simply wrong. These stories are based on speculation,” he said.

‘Clarity’

Estate Agents have been echoing the call from homebuyers and politicians for further information.

Peter Rollings, managing director of London-based Marsh and Parsons estate agents, said any further information would be helpful.

He said four househunters who came into one of their West London branches had told him they would hold off putting in any offers while the uncertainty persists.

“What we really need is some clarity,” Mr Rollings said.

He called on the government to at least confirm which price bracket any measures would apply to, in order to prevent the uncertainty infecting the whole market.

What is not clear yet is whether any ease of the stamp duty rules would apply just to the 1% band or to the higher rate bands as well.

Currently, people buying properties for between £125,000 and £250,000 pay 1% in stamp duty at the time of sale.

Those spending more than £250,000 pay 3%, while homes costing more than £500,000 incur a 4% rate.

There is a precedent for a suspension as the Conservatives temporarily suspended the tax on homes worth less than £250,000 during the 1991 recession.

Actuarial group Lane Clark & Peacock (LCP) found that the pension funds had a net deficit of £41bn in mid-July.

This compared with a £12bn surplus in mid-July 2007, which had been the first surplus for five years.

But the report said that the deficit could have been far worse but for firms re-stocking their pension schemes.

‘Volatility’

The actuaries said that the past year had been one of the most remarkable in the 15 years in which they had been producing their annual report.

“Not only have we had fears of rising inflation, which has driven up the liabilities of pension funds and the amounts companies need to hold, but the stock markets have been volatile, and recent falls have reduced the value of the assets,” said Bob Scott, a senior partner at LCP.

  Last year’s ’surplus’ lulled people into a false sense of security

Dr Ros Altmann, Pensions expert

The position could have been worse, but for these companies pumping nearly £40bn into their pension schemes over the past three years and taking some steps to reduce risks.

The analysis by LCP suggests that the pension schemes of big firms quoted on the stock market are in an unhealthier position than final salary schemes generally.

Each month the Pension Protection Fund publishes an analysis of their financial position of nearly all 7,783 such schemes in the UK, which are mainly in the private sector.

In June they had a collective surplus of just £8bn, down sharply from £53bn at the end of May and far worse than the position a year ago when the schemes enjoyed a surplus of £130bn between them.

The PPF said 71% of schemes were in deficit while 29% were in surplus.

Warning

Mr Scott said that the brief period of surplus until early 2008 had allowed some companies to take the opportunity to cut down on their pension risks, by offloading their schemes or investing less in shares.

But he was keen to give a warning about the future for pension funds.

“No sooner have companies breathed a sigh of relief about returning to surplus but they are back to multi-billion pound deficits,” he said.

“With a possible recession looming and the threat of further regulatory intervention, the outlook for continuing defined benefit provision seems rather bleak.”

Dr Ros Altmann, a former government adviser on pensions, commented that the LCP report was worrying reading.

“Last year’s ’surplus’ lulled people into a false sense of security but was probably an illusion,” she said.

“The research shows pension contributions fell from £13.4bn to £13.1bn over the year and suggests that most companies have not done much to reduce their pension risks.

“It is inevitable that employers will keep on closing schemes to both new and existing members, especially in the face of so much uncertainty around the funding and costs,” she added

Once the mortgage deal expires, homeowners will either have to remortgage to find a more affordable deal or will have to move on to their lender’s standard variable rate (SVR). The SVR can be very expensive, but on the other hand finding an affordable mortgage elsewhere is becoming increasingly difficult.

Even if homeowners do find another mortgage deal to switch to, they will most likely have to pay expensive mortgage arrangement fees, which can run into thousands of pounds in some cases. Almost a million homeowners are expected to face mortgage repayment hikes of up to 40% if they have to switch to their lender’s SVR, and those set to be affected included younger homeowners who purchased their homes within the past couple of years and those that took out 100% mortgages.

One broker said that the situation was very difficult, stating: ‘In the old days, competitive mortgage rates were typically available to anybody with more than five% equity. Now to get the best rates you need 25% or more.’ Another said: ‘There is a growing number of borrowers for whom there is little choice. They will simply have to pay more.’ 

However, one official said that some may prefer to switch to their lender’s SVR, stating: ‘The advantage of the SVR is that there is no fee to pay - and with some fixed and discounted deals coming with fees of about £1,000 or more, it is easy to see why some borrowers prefer their lender’s SVR for now. The idea is that once a competitive fix or discount becomes available the borrower can then move on to that without paying a penalty or having to give any notice.’

However, one industry professional has recently stated that despite this bad press credit cards do still provide consumers with a very useful financial tool, offering ease, flexibility, and convenience, and enabling consumers to manage their finances more effectively. However, he also said that it was important for consumers to be sensible and responsible about using their credit cards and making repayments in order to avoid spiralling debt levels.

The official, from Sainsbury’s Credit Cards, stated: "A credit card is, despite press comment to the contrary, an incredibly flexible and user-friendly way of managing your finances. In terms of spending responsibly, if you’re looking to buy something for £1,000 - a piece of furniture…or a couple of white goods - this weekend…the card gives you the flexibility of making that purchase…and paying it off when you get paid."

He also said that the global credit crunch was unlikely to stop many consumers from spending money, which has been backed up by recent data that showed nearly half of consumers were not going to cut back on spending. However, an official from the British Banker’s Association said that whilst people spent more on credit cards in May repayment figures were lower than expected: "People spent more on credit cards, but repayment levels were lower than expected in May."

EDF have blamed the increase, which comes into effect on 25 July, on record wholesale energy costs.

Energy companies have been expected to raise the costs of utility bills this summer, as wholesale prices have been rising.

EDF is the first of the major suppliers to raise prices this summer but others are expected to follow suit.

The company said it had been absorbing higher costs over recent months but it now needs to pass on costs to domestic and small business customers.