When you are heavily in debt, or facing a bad credit history, then you may struggle to gain access to credit and debit cards. Naturally, you can always use cash on the high street, but shopping for things online usually requires either a Visa or a Mastercard. Without access to these kinds of plastic, you will not be able to purchase items from large stores such as Amazon, HMV or Waterstones. There may also be problems purchasing essential household goods from online supermarkets. In these cases, you need to be able to find a quick way to get a card which is accepted by all these major online stores, without needing to apply for credit.

This is where a pre-paid card can come in very handy indeed. The basic principle is that the card is an account which you can load up with cash, either through a bank transfer or by going into a local store, which is then available for you to use online. When you run out of cash, you run out of money, and can’t use the card any more. In some ways, they work as a form of pay-as-you -go money cards*. These cards therefore provide you with a great way of getting accessible money without having to worry about credit fees.

Prepaid credit cards are ideal for a number of different uses, including using abroad, for children going on a week-long school trip, and even for use as a budgeting tool. However, one of the best things about these cards is that they serve as a protection against ID theft. After all, if you only load up the card with small amounts each time, it is impossible for the thief to use the card and rack up large debts. This makes it a much safer way of doing deals online (for example accessing member sites through the internet, or paying for an individual’s services through the internet). Even if your card number does get stolen, without money on it there is no profit for the fraudster.

Re-building your credit rating with prepaid credit cards

There are advantages to prepaid cards, including being able to budget and stay in the black. This prevents you getting deeper into debt. In addition, most prepaid cards use the Mastercard technology, meaning that they are accepted in most areas. But perhaps the biggest advantage is the way in which some prepaid credit cards will allow you to rebuild your credit rating. Although most of these pre-pay cards are not suitable for improving credit, some feature a specially designed program which will allow you to borrow a ‘loan’ which will pay your card’s monthly fees for you. In turn, you give your payment to the lender. The loan runs for a year, so there won’t be any quick returns on this idea, but combined with careful repayment of your other debts, and sensible spending, at the end of the year you should have an improved credit rating. This improvement is one of the reasons why many people choose to use these cards when their credit is low.

And the bad side of prepaid credit cards

However, prepaid cards do still have some major downsides. For example, the charges are often quite high, and may eat into your cash sum. Fees for starting your prepaid card can be as much as £10, and monthly fees are usually around £5-10 pounds). There are also transaction fees, and top-up fees, (although topping up through your bank account is often free), and inactivity fees, charges for not using the card. As well as these fees, there are also no interest payments on cash placed on the card, which can also leave you out of pocket.

Perhaps the biggest downside is that most pre-paid cards use Mastercard, rather than Visa. This prevents them from being able to use cash recovery under the consumer credit act. Essentially, if you do lose any cash through a transaction which goes wrong, you will not be entitled to money back, as with an ordinary credit card. You can resolve this by choosing to use a Visa prepaid card, but these are harder to come by, and often have protection requirements, usually checking the credit of the user, which other cards just don’t have.

*As noted by Which.

Between the rise of the Italian banking magnates and the bursting of the South Sea Bubble, the royal families of Europe kept themselves in business by borrowing money from Italian financiers.  Having the monarch, or the monarch’s council, heavily in debt like this could lead to the bankers becoming excessively powerful. In the modern world, politicians who are seen to be too close to financial institutions are seen as corrupt; in the past, this corruption was a real threat to the security of the realm. Several examples can be found of a country’s leaders relying on these financiers, only to be betrayed or left penniless. Continue reading…

For the second year running, megabank Santander has been voted the worst provider of financial services in the UK. This follows on from last year, where they were unanimously elected for their appalling customer service. In the latest poll, Santander received 40% of the votes on bad service, with the next highest, Barclays, only getting 11%. The re-election of Santander as King of Worst will come as no really surprise to the many users of the banking service.

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If you’ve ever wondered how your ancestors got on without a monthly letter from the bank, then you may be surprised to find that banking, as a recognisable institution, has been available in Britain and Europe for many hundreds of years. The early bankers were very much under-the-counter, as lending with interest was considered to be sinful for Christians. This attitude gradually relaxed over time, as more and more bankers found ways to lend money, and get interest, without being condemned by the church.

Medieval ‘Bankers’

In Medieval Europe, the earliest bankers were Jewish settlers, who were freely able to loan money. They would often lend to farmers or landowners on potential crops. They also began to lend money against future imports and exports. While these loans were looked down upon by the church, they provided an easy way for the farmers to stay in business during bad harvests. This was particularly important during later centuries, when crops began to fail on an ever-larger scale. The word bank actually has its origins in the Merchant trader’s Banca, or bench, where the lending was done. To become bankrupt, from the Italian for rotted bench, means to lose the merchant’s deposits.

Enter the Europeans

Other Europeans began to get into the act during the years of the Crusades. Travellers going to and from the middle east, either to fight or on pilgrimage to the Holy Land, needed money quickly. They were reluctant to carry large sums with them as they travelled, in case they were robbed. The Templars in particular acted as bankers to the leading nobles on conquests. They would take money in the local currency of that Templar land, and then provide a note to the depositor which would allow them to draw at the money at any other Templar site.

By the end of the 12th century, European bankers were firmly settled. They had tried to evade the old rules concerning usury by trying to offer money without interest, but asking that insurance be taken out on the money (rather like current Payment Protection Insurance today). As the power of the banks grew, so they were allowed to offer loans with interest in things which were ‘not consumable’.

By far the richest bankers lived in Italy. The Medici started running a bank at the end of the 14th century, and this lead to their enormous wealth and power until that bank’s collapse in the late fifteenth century. The Banca Monte Dei Paschi of Siena, which still operates as a bank, was founded in 1472. Sometimes goods taken in pawned items were used as collateral on a loan interest. Papal banking became the largest source of income for many bankers, with some of the notable bankers, such as Giovanni di Bicci (of Medici) being appointed as Papal bankers.

From this basis, Banking in Europe received a firm foundation, and by the time that the Renaissance started in the fifteenth century, many Kings and Dukes had taken out large loans from Italian Bankers. This lending society both strengthened the banks, and caused rulers to tax officials and even sell off land and titles in order to repay their debts.

Recent debates about how much universities should be allowed to charge students has been in the news for many months. Now that most of the larger universities have been moved to declare the amount they will be charging, it is clear that many students will struggle to pay these fees. For people in lower income groups, and mature students who might not have a grant to rely on, these higher charges can sometimes mean that they are not able to go to university at all. The same is true for those who are attending college for the first time after several years in employment, when some of the grants and financial aid offered to young people is not available. In these conditions, understanding how to finance university and college tuition fees is essential.

Bank Loans

Most people will try to take out a loan with their bank as a first step. There are two difficulties with this way of raising funds for tuition. Firstly, the bank may refuse people who have a bad credit history, which can result in them getting no loan at all, and secondly, the loan offered may not be sufficient to cover the total amount needed for fees, student accommodation, and learning accessories such as books. If this is the case, then the student will need to look around for other sources of income.

Part-Time Jobs

Most students take on a part time job in order to help cover their fees. This can be a great way of managing some of your expenses, although a part-time job can seriously eat into the amount of time you have for study and essay-writing. Part-time employers such as supermarkets will also pay on a monthly basis, which can sometimes leave students falling short at the end of the month.

Financial Aid

In some courses, students of any age are entitled to financial aid, and it makes sense to always check what you can claim. On the downside, these grants need to be applied for, and the forms completed, months in advance. Students might also have to wait for long periods before the grant is put into their account.

Instant Payday Loans Online

If fees fall due before wages or grants arrive, there is very little that the student can do. The university may agree to put off the tuition fee, but in most cases they will require that the student pay before they enrol. When you know that a grant or employer payment is due to arrive in your account within a few weeks, then a payday loan online, taken out for a month and paying a small sum, can be the ideal short term answer.

Before the recent Banking Crash, even before the Great Crash of the 1930s, there were other financial disasters which left many people desperately poor. The most famous of these is probably the South Sea Bubble. This great investment collapse, at the beginning of the 18th century, was caused by a combination of poor government intervention, over-hasty investment, and simply too many people trying to make a huge sum without having to do any work. The result of this was that many wealthy and middle class families found themselves penniless overnight. Continue reading…

History Hour: Mayer Rothschild

One of the founding fathers of international commerce and banking, Mayer Amschel Rothschild was the first member of the Rothschild family to run a bank on a large scale, and would found an international dynasty. He has been named as one of the Most Influential Businessmen of All Time by Forbes Magazine. Although he came from fairly humble beginnings, he would rise to become an associate of Princes, and was instrumental in helping to fund England’s battle against Napoleon Bonaparte.

He was born in 1744, the son of Amschel Rothschild, a small grocer who also ran a currency exchange. The family had lived within the same Judengasse, or ghetto of Frankfurt, Germany, since the 16th century, originally taking their name from the house they lived in (Roten Schild, or red shield). The house where he was born, Hinterpfann, was very small, and the Rothschild family of 10 lived with a number of other families above the Rothschilds’ shop.  Rothschild’s father died in 1755, from smallpox, leaving the family in an even worse economic position. At the age of 19, he was given in apprenticeship to a banking firm, which was traditional for the son of a small businessman. He became a distributer of rare coins, and through these contacts came to the notice of the royal family. Prince Wilhelm of Hesse became his patron, and he became a Court Factor. When Wilhelm because Landgrave of Hesse in 1785, Rothschild’s business boomed.

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The Government, attempting to shore up its finances, has decided to introduce a standard state pension amount. Currently, payments fluctuate, with some receiving very small amounts and others getting up to £200 weekly, depending upon the amount of hours worked during a life, and the earnings which have been saved. From 2015, this will be evened out, to introduce a flat rate of £155 per week for all pensioners. This will allow the government to scrape back money which has been paid into National Insurance schemes, while still seeming to give everyone a good pension.

At the moment, pensions are divided up according to National insurance payments and State Pension schemes. The base-line amount for the pension is just under £98 weekly, while people who have chosen to increase their pension can also qualify for additional rates, counted as a State Second Pension, or S2P. This is usually given to people who earn more than 6 thousand pounds a year. People putting money into the S2P will receive a larger weekly payment than those who have relied upon their National Insurance payments. The government has decided that this is too complicated, and needs to be ‘simplified’ by removing the amount that is provided through NI payments.

People who have been contributing to a pension scheme for years, with an expected pay-out of more than £150, may feel that they have been cheated. It is estimated that around one and a half million pensioners currently receive a state pension of more than £150  each week, with nearly a million of these being male earners. Those who are near the age of retirement, or who are currently receiving a pension, will not be affected by the current changes, but it will definitely affect people in their late forties and fifties, who would expect to retire after the Universal Pension comes into effect. These people may have already started paying into the S2P, but they will now lose that money.

Other fears include the idea that you will have to work full time for all of your working life in order to qualify for the scheme, at a time when many people are being laid off, and unemployment is growing. People may also be expected to work beyond the current age of retirement in order to get the full  pension.

Another disadvantage to the scheme is that it might affect other types of business and employer pension schemes. A single state pension may prevent companies from offering benefitted pension schemes, which would ordinarily have ensured a pension above the current state one. Private pension schemes may increase, but with many people having to pay a higher rate of National Insurance, these could be neglected.

Pensioners who are concerned about this scheme may wish to consider other alternatives, such as ISAs or saving schemes which will fall due when they retire. Investment in stocks and shares is another area to consider.

Perhaps not 50, but the number of ways that you can change your bank accounts have increased in recent years. Most people in the UK hold some kind of personal bank account, particularly current accounts, and it is often said that the British public are more likely to get divorced than change their bank account. This is almost certainly due to the number of barriers which banks throw up around their accounts, making it difficult for people to change. Recent comments by MPs on the Treasury Select Committee have suggested that the big 5 banks, Lloyds, HSBC, the Royal Bank of Scotland, Santander and Barclays, have too much control over the current account market, and you may feel that your own bank has taken serious advantage of this. You may be interested in getting out of bed with your present bank, and changing to a new partner.

Changing bank account

Changing your bank account to one offering a better deal can be a good way of saving money, and switching in the current financial climate can certainly help you beat the fees. In order to leave your bank, you should start by looking at the offers other banks are making. Different rates of interest might appeal, or perhaps lower overdraft charges. If your current bank account doesn’t pay any interest when you have credit, change to another that does. Some banks will even offer you money to transfer to their current account, although you will have to meet certain requirements.

Once you have found the right current account for your situation, you might choose to take advantage of your bank’s “switching service”, which will allow you to move your bank account. There are certain risks with using this service, including the possibility that payments may “go astray”, or be lost in the system. This can have negative effects, both for direct debit payments, and for money coming into your account.

You may also consider going into the bank that you want to start the account with, and requesting a change. Take with you details of your current bank, all the accounts you hold there, and evidence of your name and address (this will usually need to be a driving license, passport, or other formal methods of identification).

Your new bank should offer you an interest-free overdraft while the switching process is going on. This is to make sure that your payments go through while you are waiting for your new account to be set up. This will ensure that all of your standing orders and direct debits are paid into the account properly, rather than being returned.

Some sound advice

You will also need to make certain that the people paying money into your account know that you have changed banks. Your employer, the credit or pension divisions of the government and any ISA or stock portfolios which you hold outside the bank will all need to be informed of the change.

While the transfer is being made, and for the next few months afterwards, you will need to carefully monitor your accounts. If you use the internet, then check your bank statements every day for the first month, and then every other day in the following two months. Look out for returned direct debits, or payments which have not been made correctly. If you notice any of these errors, you will need to speak to your bank immediately.

If you’ve struggled to cope with your finances, the time may come when you have to talk to debt collectors. These are often very intimidating people to speak to, as their purpose is to take money from you, and some of them are not very sensitive about how they manage this. If you are concerned about having to pay off a debt collector, it might be worth taking out a loan to pay off the money you own, but there are also other things that you can do to make the problem go away. Even if you are completely innocent, it is often enough that you share a name with someone who is in debt. Dealing with debt collectors can be difficult, but you can find a number of sources of help.

Talk to The Citizens Advice Bureau

Citizens Advice are a great service for helping you deal with financial problems. They have seen and heard it all before, so will not be surprised or shocked by anything you say. Citizens Advice also have a number of financial solicitors who will be able to help you manage debt collectors, and can even intervene on your behalf. The Bureau is often packed to the rafters will people wanting help, so be prepared to wait, or contact them via the phone and have someone call you back.

Contact the National DebtLine

National Debtline are one of the first sources of help for people struggling with debt. These people can help you negotiate with your creditors, and can also provide you with suitable budget plans and other assistance. They can also give you advice on debt consolidation, individual financial arrangements, and even formal bankruptcy, if it comes to that.

Speak to the Office of Fair Trading

If you are experiencing unwanted calls from debt collectors, or are having trouble making it understood that you are not the person they want, then you can contact the OFT for more information. Speak to the OFT if you suffer bullying or intimidation from the collectors, and also get the names and addresses of any firm seeking to contact you in a threatening manner.

Being Pursued for Money you Don’t Owe?

If you find yourself at the receiving end of demands for payments after you have cleared a debt, then you may be suffering from illegal practices. Selling on a debt is against the law, but can still occur, and some people may find that a third-party sells on the apparent debt to collectors without checking it first. If you have had a disputed claim against you, or if you have been sought out due to debts which you haven’t taken out, then you may find it hard to prove that you are not the person they want. If you find that you are being pursued in such a situation, then your only recourse is to deal with the OFT, and hope that the company will be shut down.

Simple Payday adheres to responsible lending practices and would never advise anyone who feels themselves to be in financial trouble to apply for payday loans as a long term solution.