We’ve become used to this time of the year being the season when the ISA wars hot up, but there’s a much bigger battle afoot for our money this year!

With only weeks left to make the most of the current years ISA allowance we’re usually being bombarded every day with the latest offers from ISA providers vying for our last minute deposits of funds.

To be fair that is still happening, but the reality is that there’s very little to choose between them & the increases are relatively insignificant. Enter the Credit Card Providers in the latest battle for our plastic money!

Over the past few weeks there’s been an increase in the number of financial institutions offering us ever & ever longer periods for 0% balance transfers. Barclaycard has led the way moving the goalpost forward from 16 months to 18 months, with others moving forward to join it & charging lower transfer fees.

Not for long were Virgin money & MBNA ahead of the race & topping the best buy tables! Barclaycard has now upped its offer to 20 months, & though it charges a slightly higher balance transfer fee, it still works out as the cheaper option over the promotional term.

Kevin Mountford – head of banking at moneysupermarket.com – said: “I wouldn’t be surprised to see other lenders react accordingly by launching similar deals, but with so many vying to go top of the best buy tables, we could see even longer deals emerge.”

It’s important to tread warily however, before rushing to apply for the new deals. They may not be available to people who don’t come up to scratch with their credit history & being rejected can damage your credit rating still further.

Mountford offered the following advice: “This competition is welcome news for those consumers who are in a position to take advantage of this price war and consolidate any existing credit card balances on to cheaper deals. However, consumers need to be aware that most lenders are giving these deals to customers who have excellent or good credit histories. If you fall outside of this category then you may find your options are more limited. Before applying for a credit card, consumers need to check their credit profile and make sure there is no adverse information that would jeopardise their chances of being accepted.”

Of course, as always, it’s important to use credit cards wisely & pay off the balance by the end of the promotional period. If you don’t you’ll find you’re paying high rates of interest & your own personal battle to manage your finances prudently will be lost!

Where does one go for financial advice nowadays? More and more, it seems that decent impartial financial advice isn’t easy to come by – after all, as impartial as people claim to be, quite often you can’t confirm this yourself.

Because of this, the best way to get properly impartial advice is to make as many enquiries as possible yourself. Your bank might tell you that they have a great deal on a loan or a credit card, but you might find that by making enquiries elsewhere, you could get a far better rate or deal on what you want, which is where services like price comparison sites can really play to your advantage.

Just by tapping in a few details and hitting that button, you can view details on a huge number of deals on the product you’re looking for, ranked to be as close as possible to the parameters you set in the first place, and many of which you can apply for directly.

Of course, this is all well and good, but who do you turn to if you don’t know what you want? Well, the advice given to you by your bank can normally steer you in the right direction, just don’t assume that they will be able to offer you the best deal – often they will be able to, due to a special “existing customer rate” or similar (This is often true for loans, as your bank has a greater knowledge over your financial dealings), but quite often it can be worth shopping around – especially in the case of cash ISAs at the moment, where some banks are offering just .05% interest rates and standard savers often offering little over 3% – Which, when you consider that, according to moneysupermarket.com: “A higher rate taxpayer needs an account paying at least 6.17% in order to earn a positive return [on their savings], while someone in the basic taxband needs to be earning at least 4.62%” Means that at the moment, finding the best place for your money is even more important than ever.

There is a lot to be said for carefully considering your financial position, learning about the different options available and then choosing the one most appropriate to you. True enough, this may not be the quickest way, but do you really want to rush into what could be a very important financial decision? moneysupermarket.com can make this decision easier, offering not only detailed price comparison, but a wealth of other information that can help you decide on what product and what type of account is right for you.

Plans to split British bank Northen Rock in two which would allow for its partial sale has been granted by the European Union.

The divide would result in two separate banks forming and are already being described as the “good” and “bad” banks.

The “good” bank would offer new lending, retain some of the existing mortgages and hold its savers’ money.

The “bad” bank would be used to repay the existing government loans and hold the remaining loans.

 Decisions made by the EU to accept the move are seen by Northern Rock as “an important and positive step.”

Changes to the existing setup will be made towards the end of the year.

The EU revealed that the good portion of the bank would be expected to grow and then be sold to third party, with the bad bank allowing its assets to dissolve then becoming liquidated.

The good bank may be sold prior to the general election next year with potential buyers being speculated already, with Virgin and National Australia Bank, owner of Clydesdale and Yorkshire Bank, among the interested parties.

EU Competition Commissioner, Neelie Kroes, believes that the move would make the bank a good long-term option, revealing that “this decision demonstrates once again that the EU’s state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage.”

Whilst Jonathan Todd, European Commission spokesman, said caps would need to be applied for the duration that the good bank remains owned by the public.

Some of the caps include a balance sheet reduced to a quarter of its size prior to the crisis, not being the market leader for loan interest rates, a cap set to limit its lending to one-third of Northern Rock’s 2008 levels and also a cap on retail deposits to be slightly lower than the pre-crisis level.

An investigation was engaged by the EU into Northern Rock in April 2008, two months after its nationalisation.

The results from the investigation showed that the UK government was kept at a “necessary minimum”.

By 30 June, the bank had paid back approximately half the taxpayers’ £26.9bn loan and will gain a further £8bn from the government during the end of year restructuring.

The EU stated that the restructuring would reduce its market share to below half of its pre-crisis level and “correct the excessive expansion of Northern Rock pre-crisis.”

Northern Rock released a statement, saying “this approval is an essential requirement of the planned legal and capital restructure, which is central to the business plan for Northern Rock.”

“The restructure will strengthen the capital and liquidity position of Northern Rock significantly, and offers value for money to taxpayers” and it would be “business as usual” for its customers.

Some Barclaycard customers have found their interest rates cut as the company is pressured to help people struggling with their finances as much as possible.

Approximately three million customers will see a massive 2.5% to 5% drop in their interest rates.

However, some critics are saying this is too little too late, and that credit card firms are reacting too slowly to the Bank of England’s Bank Rate fall, which is currently at 1.5%.

Currently, thirty one million people own credit cards, and half of these are paying their credit card bills at the end of every month. These bills have an average interest rate that is over ten times higher than the Bank Rate.

Changes to come?

Barclays is the first to make a move like this since all major credit card providers in the UK agreed to set new “fair principle” rules with the government in December.

Other changes that Barclays intends to make include the introduction of a helpline which will offer financial support, lower rates for new customers and four month freeze on rates for existing customers.

They have also decided they will avoid contacting late payers for two months, on the understanding that the customers are actively working to sort out their financial problems.

Who will benefit from the cut?

However, according to Anthony Jenkins, chief executive of Barclaycard, when it comes to the interest rate cut, although three million will benefit from the interest rate cut, a further nine million will not see any change as their risk of defaulting had increased.

He said: “It’s a difficult time for many customers and for some their risk has gone up.”

He also added that, while the Bank Rate has fallen sharply, people need to remember borrowing money to lend to customers is “just one element” of its business.

It’s not just Barclaycard that’s changing

After they were threatened by the Office for Fair Trading last month, many credit card firms are looking at a new code of conduct, all of which seem to include giving customers struggling with repayments some time to find the funds.

Companies will also have to give customers 30 days notice when they intend to increase their interest rates, and will not be able to increase rates for the first year after a customer signs up for a credit card. After the one year period, companies will be allowed to increase interest rates a maximum of every six months.

However, they are also going to cover those who are in financial difficulty and struggling to pay the minimum repayment amount or who are receiving help from a debt advice service.

What’s Your View?

Are credit card companies doing enough to help customers, or is it too little too late? Will the new plans make a difference, or are they just a waste of time? Have your say here.

Alistair Darling says that plans to establish a “bad bank” have not been ruled out, merely put on ice for the time being.

The plan was introduced in January, with the aim of ‘ring-fencing’ toxic bank asset and insuring banks against heavy losses on assets that are difficult to trade.

What Mr Darling Said…

The Treasurer told the House of Lords Committee: “We’ve certainly not closed the door on a ‘bad bank’ if that is necessary.”

He added that in his opinion: “we still need to look at a range of options” that are available.

He also claimed that the boardroom of financial institutions needed to change, asking the House of Lords Economic Affairs Committee to query the liabilities they are taking on.

He said: “That means, to my mind, the whole culture in boardrooms of financial institutions has to change.”
 
He claimed that executives and non-executives “are not just there for the ride. And indeed if some of these institutions had asked more questions about what was going on perhaps we might not have got into this difficulty.”

What the Government did to help in 2008…

Billions of pounds of taxpayers money was put into the banking system last year to keep it going, including money going into Lloyds TSB, Royal Bank of Scotland (RBS) and HBOS.

The government also made Bradford and Bingley and Northern Rock private banks.

What the Government are doing to help  in 2009…

The government is continuing to try and solve the cash crisis problem. Last month they introduced another package of a list of measures in order to encourage banks to lend to businesses and individuals.

One of these new policies included was the idea of setting up insurance for banks against losing more money from bad debts at the beginning of the credit crisis – the “bad bank”.

Initially, it was thought that setting up a “bad bank” would take too long, and it would be difficult to fairly price such toxic assets.

The Bank of England is also extending its scheme whereby they loan money to banks, who in return let the Bank hold onto their dodgy assets for a year.
 

What Do You Think?

Is the “bad bank” plan a good idea? Is it right that the plans have been put on hold? Should executives be asking more questions about their business?

According to research from Barclays, the stock of small businesses in England and Wales look likely to drop by as much as 150,000 by early 2010. The bank says this is due to tighter credit and tougher trading conditions.

Richard Roberts, head of small and medium-sized enterprise analysis at Barclays believes that the stock will fall by up to 150,000 “in the course of the downswing”.

“Growth has already stopped – closures have been higher than start-ups for some time,” he added

Mr Roberst forecast covers venture large enough to have business bank accounts. These have risen in number to about 2.85m in response to steady growth and interest rates. The prediction, which Barclays will make at an enterprise conference today, is more bad news for Gordon Brown, a long time champion of the entrepreneur.

Kat Callo, founder of Rosetta Consulting, a specialist property company, said: “Many young people and corporate employees who were thinking of establishing their own business are deciding not to. It is a sobering time.”

Start-ups are losing some of its glamour as high profile businesses crack under financial pressure. An example of this is one of Management Today’s top 35 young businesswomen to watch in 2006, Pepita Diamand. An ex-fashion journalist, her company Wrapit, went in to administration recently, leaving couples without gifts and guests out of pocket.

Mr Roberts does admit there will be less business failures than in the recession in the early 1990s. Company liquidations jumped by almost 15,000 to 24,000 between 1989 and 1992 as economic growth faltered. He said: “In the early nineties there was a larger number of new companies with heavy debts, which were often overdrafts repayable on demand.”

Harry Rich, chief executive of Enterprise In-sight, which co-ordinates Enterprise Week, an annual national festival, thinks that enterprise is “more important than ever in tough economic times,

“All the external drivers, such as the need to move away from an old-style manufacturing-based economy, are still there.”

Gordon Brown is to unveil a multi-million pound package of measures that are aimed at reviving the housing market today.

More funds are to be made available to local authorities to help first-time buyers get a foot on the property ladder. Councils will buy repossessed and unsold properties, and offer financial assistance to borrowers in return for a stake in their homes or outright ownership.

The Treasury is also considering a postponement on stamp duty – the tax charged on the purchase of a property - for lower value homes, as well as a tax-free savings account for first-time buyers.

The prime minister is trying to recover political ground after months of declining support in opinion polls and chancellor Alistair Darling’s warning last weekend that economic conditions were “arguably the worst they’ve been in 60 years” and voters were “pissed off” with Labour.

On Sunday, the justice secretary, Jack Straw, attempted top play down Mr Darling’s comments, defending both Brown and Darling’s handling of the economy. “We’ve had a very good period of economic management and economic success which has, for sure, provided us with a really serious platform to weather these storms,” Mr Straw told the BBC.

The package will be followed later this week, or early next with measures aimed at helping lower-income households facing hardships as a result of rising fuel bills. Further measures aimed at reviving the wholesale mortgage market are being delayed by the Treasury until this autumn’s pre-budget report, pending agreement between ministers and the Bank of England.

According to the Treasury, the package could amount to around £1bn, bringing forward allocations already pledged and making available additional finance in new funds.

As Mr Darlings comments reverberate around Westminster, the Conservative government claimed the government was divided, and many within Labour believe Darlings head will roll when Gordon brown reshuffles his cabinet after his party’s conference at the end of the month.

“The problem with Alistair [Darling] is that he is disastrous in presentational terms and gives the impression of not being in control of events or responding to them quickly enough,” one Labour backbencher said.

The inflation rate, when issued later by the Bank of England, is expected to have risen above 3 percent in May, which could force the Bank’s governor to write an explanation to the chancellor as to why the rate is above the target of 2 percent.

Rising oil and food prices have pushed up the cost of living, while the UK’s economic growth has slowed.

The Consumer Price Index (CPI) rose unexpectedly in April from 2.5 percent to 3 percent, the biggest rise for six years. Some analysts predict CPI in May to have reached 3.2 percent. Rising Inflation has not only affected the UK, much of the worlds economies have suffered.

“Having leapt unexpectedly in April, there is a serious chance that consumer price inflation will move higher in May,” said Vicky Redwood, an analyst at Capital Economics.

If, when the figures are announced, they are one more percentage point above the governments 2 percent target, the Bank of England governor must write a letter to explain how it is to take control of consumer prices.

Mervyn King and his colleagues are likely to say that international commodity price hikes are to blame for the rise.

Up to this point, Mr King has only had to write one of these kinds of letter before, in April 2007.

Howard Archer, UK economist at Global Insight, said: “This would almost certainly be the first of several letters, as consumer price inflation looks well set to reach 4% this summer before starting to fall back late in the year.”

It would appear that the Monetary Policy Committee (MPC) – the group of experts that set the Bank of England’s interest rates - is in a tight spot.

Analysts have warned that the rise in interest rates to curb inflation would dampen an economy that is already struggling from slowing growth and a weakening housing market.

At the most recent rate-setting meeting on June 5th, the Bank did not change its interest rate of 5%. The MPC, in an attempt to help the slowing economy, had already cut interest rates three times since December.

However, despite pleas from those struggling in the housing market, MR King and his colleagues will need to be convinced that the inflationary threat has passed.

The European Central Bank, which governs the 15 nations using the Euro, warned that inflation remained its biggest concern and that it would raise rates if it felt price stability was under threat.

Consumers and companies are already struggling with the effects of higher energy and food bills. With oil prices nearly double over last year, and the cost of petrol and diesel constantly on the rise, people have reigned in their spending in other areas.

As well as this, food prices have surged to record levels because of increased demand and inclement weather in key producer nations.

As the results of today’s locals elections in England and Wales start to roll in it seems that Gordon Brown’s mandate to run the country may be hanging by a thread. Initial indications are that Labour will lose up to 200 council seats and a whole host of councils. But what does this mean for you? What does this mean for the economy?

The good news is that by sending Labour a very harsh message the voters of the UK are putting great pressure of Gordon Brown to deliver to the voter, with tax friendly policies and assistance for those in real need. The bad news in the short term is that the UK economy has never been as depressed and low for many years and there is no short term fix.

What is the outlook for the Stock Market?

One thing which the stock market dislikes is uncertainty and while the vote in the local elections seems to be indicating a change in government at the next general election, politics has never been that simple. The present government are very unlikely to call an election until 2010 meaning that we effectively have a government ruling the country that does not have a recognisable mandate from the electorate.

Outlook For Taxes

While the Labour government will be looking at every way possible that they can tax the rich and subsidise the poor, their hands are really tied in the short term. They need to the more wealthy of the country to keep the economy going in these difficult times, but they need to reconnect with their core voters and ensure that they have a more comfortable living. Very tricky!

Outlook For Government Policies

The government can now ill afford to push out more and more policies which are being resisted by the masses. We will see more and more Labour MPs fighting back against the government, voting against policies and looking to ensure that they do and say the right things to retain their seats at the next general election.

Outlook For Cost Of Living

This is another area in which the UK government have very little room for manoeuvre, they can’t reduce taxes because they are already running a massive budget deficit and tax income is set to fall further. The possible only chance they have of getting back onside with voters is to force the utility companies to give a little more back to society, but even this will be difficult because the utility companies have had valid reasons to increase prices of late.

Summary

There are many who are expecting a leadership challenge in the summertime as the iron grip which Gordon Brown was once so famous for continues to falter. He has lost the trust of voters, he is losing the trust of his own MPs and he is up against a refreshed and rejuvenated Conservative Party.

Make no mistake, life at Number 10 will be very tough for the next couple of years, if Gordon Brown actually manages to see out his term in office – which to many seems more and more unlikely by the day.

Of late consumers in UK are facing financial crunch due to the escalated fuel and food costs and falling global economy. Also, they are very much concerned about the current employment situation and economic development and are willing to spend more than what their income permits. With raising claimant count, the lenders have fixed up more stringent borrowing conditions for giving credit. As a result, consumers are seeking expensive credit and are facing tough terms and conditions. Though people tend to spend less, there has been a marked increase in high cost credit. With rising inflation, people quickly use their salaries and are forced to make purchases with their credit cards to meet their routine monthly expenses. As credit card companies in UK are unable to check and verify applicants’ income meticulously due to the large number of credit card users, the number of unscrupulous people holding credit cards is increasing alarmingly.

It is said that London is the hotspot of credit card fraud in UK and incidents of plastic fraud are on the rise due to the large number of credit card holders in London. However, recently, there has been increasing awareness amid people about the credit card frauds and they have started following some precautions while using credit cards. Also, with the introduction of debit cards which contains many of the features of credit cards, most people have switched over to debit card and use them extensively for their daily requirements. The unique difference between credit card and debit card is that in a debit card the cash is debited from the current account of the user and hence there is no debt to face and also there are no processing charges. Thus, people are increasingly tempted to use debit card more than credit card as they are unable to afford high cost borrowings anymore.

On the other hand, internet commerce expects web users to key in credit card information when they make purchase online. But, the consumers are worried about the safety and security of the financial data they provide when they do online shopping. At the same time, the industry has been trying hard to boost confidence and trustworthiness of the online shopper through numerous security systems. Intelligence sharing initiatives between banks and the police supported by sophisticated database is giving better results. The Home Office of UK firmly supports these data sharing measures to prevent online frauds and also made provisions to legalize the data sharing between private and public sectors. Several initiatives have proved very useful in reducing fraud which includes the squashing of chip and pin and wide promotion of secure payment methods. The Fraud Intelligence Bureau formed by the banking industry which is a combination of law enforcement agency, banking industry and intelligence sector unit dedicated for Cheque and Plastic Crime is working hard to improve information sharing between these agencies.

Awareness amongst consumers about the simple security procedures involved in online shopping is very low and only when they know how to figure out the secured sites, the credit card fraud will decrease. A golden padlock on the bottom of the page of the site can be used to check the authenticity of the site and when they right click the lock, they can find out whether the website owner and the certification match each other.