Monthly Archives June 2010

How Do MBNA Fund All the 0% Offers

How do credit card companies manage to offer 0% interest rates?

I haven’t spoken to any credit card companies about this so this is purely speculative but I would imagine they borrow funds at a set interest rate for a set term. They then take on new customers at 0% in the knowledge that some of those customers will not clear their cards each month and will make purchases as well as transferring balances at 0%.

These customers get charged a much higher rate of interest than the rate at which the card companies have actually borrowed the funds which subsequently covers the lower interest the card companies pay themselves.

Then there’s all the late payment fees and the balance transfer fees.

In addition to which, people (including myself) are getting royally shafted by interest rate hikes just because during a financial crisis/recession and reduced earning period only the minimum amount is being paid each month.

How is this fair?

It isn’t but so far I don’t see a way around it.

I could dispute the debt and try to get a copy of the original agreement and I am sorely tempted to do so but for two reasons:

1/ I used the money and I’m a responsible person (or at least I like to think so!)

2/ MBNA are pretty hot at keeping original agreements (so I’ve heard)

MBNA themselves phone me up asking me if I want to consolidate the debt into a secured loan against my house.

I’m starting to think this is borderline extortion!

This is what I think when I read between the lines of the letters they send:

 

Dear MBNA customer,

We can see you are only paying the minimum amount off your credit card balance each month and as the economy is suffering and we understand your income may have been affected, we’ve decided to hike your interest rate up to about 25% – 28% so it now costs you a lot more than it did.

But don’t worry, as a valued long term customer we’d like to offer you the opportunity for us to pass your details to our preferred secured loan partner who will take a share in your house until the debt is paid! We knew you’d be happy to hear that!

What we’ve actually done here is steer you into a predicament that could:

1/ Earn us commission for passing your details to our secured loan partner

2/ Get your debt off our books and makes us look good to our shareholders.

3/ Give us more money to use to snare more customers into taking one of our products

If you’d like to leave feedback on how you think you’ve been treated please fill out the form below:

On a scale of 1 – 10 how would you rate your experience (1 being excellent and 10 being really really excellent) please circle your response: 10 – 10 – 10 – 10 – 10 – 10 or 10

Yours mockingly,

MBNA

How do we get credit card companies to play fair?

Considering a Recession Proof Career?

Unemployment is still rising and currently stands at 2.47 Million or 7.9% of the working population. In the last quarter another 23,000 people found themselves out of work.

Many have been out of work for months already and are still struggling to find a steady source of income and the indication is that things are going to get worse.

For some this has been seen as an opportunity to make life changing decisions and dedicate time and effort into a complete change of direction by pursuing or studying for a new career.

I would always encourage somebody to do whatever it is they want as long as they enjoy it. If you enjoy your work, you will be happier and more productive and therefore more likely to progress further along your chosen career path.

However, with the reality of a global recession in the air one’s decision may be swayed towards the kind of work that could survive through the downturn and a possible/probable future recession.

Throughout this whole financial debacle there have been numerous news stories and articles with tips and advice on what constitutes a recession proof career and more recently trends have been identified that show which sectors currently have the highest demand for staff.

In 2009 Yahoo News suggested The 10 Safest Jobs in a Recession:

1/ Education – ah, now with the cuts that are coming is this still a safe bet? There are still incentives and a shortage of applicants…

2/ Health and Social Care – Private maybe but public…not so sure.

A quote from 2009 is now somewhat off the mark  – “This Government is committed to keeping unemployment down and therefore health, education and social services will continue to hire”.

3/ Social and “green” housing – as above….

4/ Accountants/finance directors/compliance officers – all pretty vital and some courses are very cheap. Woodgrove Tutorials are offering an IAB (International Association of Bookkeepers) course for just £225 – reduced from £350!

5/ Internal audit – a very interesting career choice and certainly in demand but not something that’s easy to get into and could take a long time to qualify. See http://www.theiia.org/

6/ Insurance – always in demand – everyone needs car insurance and buildings & contents but there’s also public liability insurance, income protection insurance, life insurance (which historically does well during recessions).

7/ Credit Control & Purchasing – companies always need to keep money coming in and to find the best prices to reduce money going out.

8/ Energy – everybody needs it and it just keeps going up in price… Research and development into alternative energy options is a huge growth sector.

9/ IT – Still a massive growth sector! Look at the success of the completely pointless iPad!

10/ Public Transport Projects – Oooh, impending spending cuts…?

Predictions and suggestions may not be as appropriate or accurate as they were just a year ago but there are other sources available to help with the decision making process of anyone contemplating a career change.

In April 2010 the latest Government approved shortage occupation list detailed specific job titles that are currently in short supply in the UK and the Reed Job Index provides information about sectors that are seeing an increase in demand.

Cross referencing these with a list of dream jobs could result in a comfortable compromise that leads to a happy and prosperous future!

The best time to do something that improves your future is always ‘now’.

Falling into a ready made company

Every now and again bloggers can be found using the internet for their own personal gain. And why not. The internet is massive, the marketing potential is huge and the target audience is sometimes ready made and although the internet is really about information there is no doubt it’s also a great money spinner.

Therefore, having recently inherited a small business that requires a little TLC I thought I’d try to boost its online presence slightly by writing a little article with a touch of search engine marketing thrown in:

Since 1978 my Uncle had a small bookkeeping practice. For many years he serviced many regular and happy customers who were mostly self employed people. A botched operation sadly left him unable to concentrate properly which is very counterproductive when you need a head for figures.

My father took over the business and by taking on better premises and making a bit of a noise he was able to build up the business to provide small business and self employed bookkeeping and accounting services to a good number of clients in the Southampton area.

Several years on and a bit of bad luck with the office premises meant the business had to move from a main road shop front location to a small back room in another building. In addition my father’s business interests had strayed somewhat from the bookkeeping and we all know what happens in small business if you take your eye off the ball!

So when the old stick suddenly shuffled off last year I found myself in a bit of a predicament.

What to do with the business.

It was approaching Xmas and the two very loyal members of staff needed paying and client accounts still needed to be completed. The choice was obvious really!

Having been working in the shrivelling mortgage industry for the last 2 years this was clearly an opportunity to rejuvenate an established business that was once quite profitable and at the same time safeguard the jobs of the staff and the needs of existing clients.

Just over 6 months on and the business is once more on a main road with a shop front and a new sign, the staff are in a much bigger room with bigger desks, flat screen monitors (finally!)and a dedicated store room for files (instead of piles in corners!). 

The premises we now let come with a flat above and subletting the flat virtually covers the total rent keeping our overheads much lower. A saving we can pass onto our customers.

I am now embarking on bookkeeping and accountancy courses so that I can continue to grow and expand the business and put more letters after my name.

As well being small business and self employed bookkeepers and accountants in Southampton clients also now have access to a wide range of personal finance services from mortgages to pensions plus web building, marketing and IT.