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A third of UK adults are relying on overdraft facilities to get by, according to new research from uSwitch.

The price comparison website found that 35 per cent of the 28 million current account holders who have overdraft facilities (14 million people) use them each month to supplement their income.

It also found that one in four are overdrawn permanently, even after they have been paid, and that 39 per cent depend on an overdraft to make essential mortgage and bill payments.

According to uSwitch’s findings the average account holder is 677 in the red. They also show than men are the worst culprits when it comes to relying on overdrafts, notching up an average balance of 867 compared to 515 for women.

Nick White, head of personal finance at uSwitch, said: “Overdrafts are now an everyday part of life, but we are concerned about the increasing reliance that people are placing on them.

“They are no longer seen as a short-term borrowing facility and for the 3.5 million people in this country who are permanently overdrawn, they are an absolute necessity.”

He said that because overdrafts have no structured repayment scheme there is a concern that many people will struggle to pay off the debt, and so more must be done to educate consumers about prudent financial management.

“At the very least, it is clear that more needs to be done by the banks to communicate the key terms and conditions governing current accounts in ‘plain English’, and to improve financial literacy amongst their customers,” he said.

Only a third of Britons bother to save regularly, according to a report from Bradford & Bingley.

The loan and savings provider found that whilst 36 per cent save money often, 20 per cent say they never put money away. One in ten would rather spend their hard earned cash on consumer items than put their money away for a rainy day.

Over a quarter of those asked said that they cannot save because they do not have spare household cash. Bradford & Bingley suggested that high consumer debt is eating away at UK household’s ability to put money aside.

“The spending culture has certainly replaced the savings culture in the nation’s consciousness,” said Steve Potter of Bradford & Bingley. “With so many attractive interest-free deals many people are being tempted to buy now and pay later.

“Just how much they will later pay, however, remains to be seen. What’s clear though, is that if consumers don’t start looking to the future and putting in place proper savings plans they’ll be facing many ‘cash strapped’ years.”

The survey also discovered that few ‘rate tarts’ exist amongst those who do save. Only 12 per cent said that they regularly look at the savings market, whilst three in five said that they trust their bank or building society to provide a competitive rate.

More then three-quarters of active users of basic bank accounts feel that they are more confident in dealing with money as a result of opening the account, according to new research.

Basic bank accounts allow payments such as benefits or pensions to be credited directly to the account, withdrawals through cash machines and bills can be paid by direct debit, but they lack things like an overdraft facility.

The British Bankers’ Association spoke to 1,000 adults who had opened a basic account in the last year.

Some 90 per cent of customers said they were confident that the account meets their needs, 92 per cent felt that opening an account was simple and straightforward, and 91 per cent of customers are satisfied with the way the account has been handled.

Of those surveyed, the majority cited the simplicity of the account as the reason for opening a basic bank account.

Figures show 121,000 basic accounts were opened in the last quarter of 2005, of those 6,100 accounts were upgraded to fuller accounts, and 164 million basic bank accounts opened since the account type launched in April 2003.

Ian Mullen, chief executive of the British Bankers’ Association, said: “This research clearly shows that the features of the basic bank account closely match peoples’ needs.

“As customers become more confident with their finances, a change to an account with fuller features may be appropriate.”

Find a perfect bank account by comparing rates and extras today.

Declaring bankruptcy can have long lasting effects on a consumer’s credit record, contrary to the common belief that it will be wiped clear for the future, warns a credit reference agency.

Levels of personal insolvency have seen a sharp rise in the past few months with figures from Experian showing over 23,000 people declared bankruptcy in the first quarter of 2006 an increase of 73 per cent on the same period last year.

The credit expert has launched a new guide called ‘Your Credit Report and Bankruptcy’ to explain what it means, what effect it can have and how to seek alternatives to bankruptcy and where to go for help if you are in financial difficulty.

“For some people there might be a better or at least a more suitable solution like Debt Management Plan. We want to make sure that people understand the consequences of bankruptcy, “said James Jones, consumer affairs manager at Experian.

The agency is concerned that in general, people wrongly assume that their credit record is wiped clean after being discharged.

“If you are to blame for your bankruptcy, you could have a bankruptcy restriction order. This will appear on your credit report for up to 15 years. It is a tough restriction but it is made to stop people abusing the system,” Mr Jones added.

One possible solution to Britain’s mounting debt problem is to simply ‘nip it in the bud’ by teaching children the value of saving.

This is the message of Scarborough Building Society who recently launched a new campaign to promote their Scarborough Smart Kids range. As part of raising awareness, the building society is trying to boost the ’street cred’ of saving by the use of new slogans for their branches sporting anti-authoritarian motifs such as Kids Only and No Adults Allowed!.

Children will also have their account passbooks stamped with colourful stickers drawing attention to the importance of saving, a message intended for their parents and guardians too.

Tony Burdin, Head of Group Marketing for the Scarborough Building Society, says it is time to start educating children and parents about the value of saving.
“Because there are so many worrying statistics out there though, we felt it was also important to get these messages across in a fun way hence the reason for a sticker campaign which we hope will both appeal to parents and communicate directly with children in a language which will be meaningful for them, ” he said.

Virgin Money is another company stressing the importance of encouraging children to start saving as more and more young people struggle to buy property. Jason Wyer-Smith, a spokesperson for Virgin Money, said: “The thought of saving for a pension can fill a young person with dread so it’s great to be able to get your kids off to a flying start when they’re still in nappies!”

The government has recently switched onto this and every child born after 31st August 2002 will receive a voucher for 250 which can be used to open a child trust fund account, giving them a small nest egg to nurture over the years. But perhaps more important than stashing money away in kids saving accounts, is the active process of actually teaching them the discipline for themselves.

One successful scheme in America is proven to help children learn the habit of saving by teaching them how to allocate money and categorise their allowance. The Financial Peace Junior Kit, suitable for ages 3 to 12, was developed by David Ramsey who and includes three separate envelopes labelled ’savings’, ’spending’ and ‘giving’. The child learns to stash away money in each section but if they fail to do the chores they receive no money and soon begin to learn the value of work!

Schemes like this are worthwhile but parents should be careful they do not over reward their child every time a job is completed. The real aim is to teach them financial skills. By paying your children a small amount every time they sweep the drive, you are encouraging them to develop entrepreneurial skills, prompting questions such as ‘who else wants their drive swept?’ or ‘which of my neighbours’ gardens can I weed?’ and ‘how can I earn more than this using my brain!”

By installing these disciplines in children the next generation will hopefully exercise more thrift than the current and learn the value of pension schemes, savings accounts and future property investments.

Find the latest savings account offers from UK Net Guide.

“Sex and the City” may have given us a rose-tinted view of what it means to be young(ish) and single in the 21st Century, because single adults constitute the biggest group living in poverty in the UK today.

A new survey published this week claims that a staggering 3.9 million single people live in poverty and this number has risen by around 300,000 since 1997.

Over the same period, the number of children and pensioners living below the poverty line has fallen considerably; by 700,000 and 500,000, respectively.

The report has been compiled by the anti-poverty charity, Elizabeth Finn Care (EFC).

Speaking at the launch the of survey, EFC chief executive Jonathan Welfare warned: ” The government’s focus on child and pensioner poverty has made significant progress – we now need to give the same level of attention to the group that has not benefited – namely working-age adults without dependent children.”

But why are today’s singletons falling into poverty?

Housing costs, better social security benefits for families with children and other obvious factors all play their part.

The EFC study also suggests that single people are less likely to have strong family structures that they can fall back on in times of crisis.

There are more and more single-person households in the UK today, and there is considerable evidence to show that many singletons live far away from and even lose touch with their social and family circles.

Many people living alone are divorced, widowed and separated women; a group particularly liable to poverty.

And precisely because many single people are outside firm social structures, it can be hard to keep track of them.

“They remain unseen because many come from backgrounds where we don’t often expect poverty to exist and they don’t come forward to ask for help”, Mr Welfare argues.

The EFC report claims that 20 per cent of the population live in poverty. That adds up to 12.5 million people.

Adults with children make up 22 per cent of Britain’s poor. 900,000 of their number are single parents.

What can poverty possibly mean, if it encompasses so many?

Official calculations classify “poverty” in relative, not absolute terms.

The poverty line is drawn at 60 per cent of the national average annual income as such, poverty in modern Britain is obviously not measured in the same terms as the absolute poverty of the developing world or the poverty of Victorian times.

In practice, poverty means a weekly income of 123 or less.

However, since the publication of the EFC report, the government has attempted to put the singleton question into context.

A spokesperson for the Department for Work and Pensions explained: “While it is true that there has been little change for this group, it remains a group that has lower than average risk compared to the whole population, and compared to all working-age adults.

“Working-age adults are less likely to be in relative low income than children or pensioners.”

But Mr Welfare insisted that the causes of poverty are becoming more complex.

“If you are single and don’t have the safety net of financial emotional support from a spouse or family to back you up and money becomes an issue, you can be left feeling that there is nowhere to turn. As a result, things can quickly spiral out of control.

“Many of these people don’t get the help to which they are entitled, nor do they naturally turn to the state or to charities for help. Making people more aware of the support we and other charities can offer is a major challenge.”

Skimming is the fastest growing form of fraud in the UK, increasing by 85% up to the end of 2004, according to the Association of Payment Clearing Services, a trade organisation.

Despite the efforts of a specialist police unit called the Dedicated Cheque and Plastic Crime Unit, millions of pounds are still lost each year by unsuspecting victims.

These are the people who have the details of their bankcards or credit cards stolen by criminals, who fit cash machines, or ATMs, with false fronts that read the cards magnetic strip. A tiny camera records the unsuspecting victim typing in his or her PIN. The card is then cloned (counterfeited) by the fraudster and used to empty the victims bank account.

Chip and PIN cards were widely introduced in Britain around the beginning of 2005 in the hope that they would help eradicate cash-card crime and fraudulent transactions. The belief being that it is impossible to use a stolen card without the correct four-digit PIN.

However, the chip and PIN system has failed to offer protection from skimming because most ATMs still read cards magnetic strips and not the microchip that is much harder to counterfeit.

Cards still have their strips so that they can be used to pay at retailers and businesses that dont yet have chip-readers. Also, many visitors from other countries have cards with no chips, only magnetic stripes. This makes them more vulnerable not only to ATM fraudsters, but also to dishonest employees of businesses that accept debit cards but dont have a chip and PIN payment system.

Banks are finally becoming alert to the problem of skimming, and more and more financial organisations are trialling chip-reading cash machines usually running their tests at or around midnight, when ATM fraudsters are most likely to withdraw their ill-gotten gains without fear of interference from honest members of the public.

Barclays has also made use of special anti-skimming devices that fit over the slots of the banks ATMs and prevent criminals fake fronts being stuck on. The cash machine is shut down if the anti-skimming gadget detects defrauding technology.

To avoid becoming the victim of skimming:

Dont use an ATM if you think it has been tampered with in any way.
Use your body to shield the keypad when entering your PIN, and dont allow anyone to distract you.
Treat your bankcards like cash, keeping them safe about your person and not letting them out of your sight when making a transaction.

If you suspect that you have fallen prey to skimmers:

Cancel your cards immediately. Your bank or credit card company will operate a 24-hour helpline for this purpose.
Report your suspicions to the police.
You will not be liable for transactions made by a cloned card, unless your bank or credit card company can prove that you acted fraudulently or irresponsibly (by, for example, writing your PIN on a slip of paper and keeping it with your card).

For further information see the UK Net Guide feature Chip and PIN Cards, or visit www.cardwatch.org.uk.

Perhaps this is because changing current accounts is often seen as a process littered with potential minefields. After finding the best saving rate, consumers need to consider overdraft charges and customer service quality.

Then there is the matter of smoothly transferring direct debits and standing orders as well as making sure your employer doesn’t put your pay in the old account.

However, with First Direct kicking off 2008 by announcing 100 for every account switcher, there are clearly huge financial savings to be made.

Saving rates

Shop around and let your savings make you money. Alliance and Leicester is currently offering an AER (annual equivalent rate) of 8.5 per cent and only requires a minimum deposit of 1.

However, if you are lucky enough to be in a position to be thinking about saving rates, make sure you aren’t keeping too much of your hard earned cash in a current account. These funds would be much better placed in a high-interest savings account.

Overdrawn and over charged?

According to a study, conducted by BBC consumer programme Watchdog, 46.8 per cent of consumers do not think they should be charged for going over their overdraft limit without authorisation.

Some banks have wised-up to this. Abbey National now offers a zero per cent overdraft for current account customers for their first 12 months with the bank.

Things to look out for

Hidden charges – some banks are now charging consumers for their accounts. First Direct, for example, has a 10 monthly fee, even for bankers in credit.

Strings attached to introductory offers the high interest earning rates many banks offer only apply if you deposit a certain amount of cash when you join.

Online banking this can make life a lot easier, so it is worth checking if your bank has this facility before making the switch.

Comparison websites

Fortunately, help is at hand. Over recent years a number of websites have sprung up that amalgamate all the essential information for consumers, helping them discern between the good and the bad.

Sites such as uSwitch and Moneysupermarket.com do the hard work, forming handy tables with the different pros and cons accounts offer.

In order to make use of these facilities, however, you must first decide what it is you are looking for from a current account.

Kevin Mountford, head of savings and current accounts at Moneysupermarket.com, said: “Make sure that the product which you choose is right for your circumstances and you are not just being seduced by headline rates.”

He added: “The second thing is make sure that you deal with a bank who gives you the right promises in terms of the switching process.”

Some banks offer the services of a dedicated team that will handle that switching process, to make sure that joining their bank is painless. As it should be.

Consumers should take advantage of the recent rise in interest rates and budget to save for the future, according to independent financial advice.

Figures from IFA Promotion reveal that nearly three-quarters of UK consumers (72 per cent) believe they are not saving enough.

Around eight million people, who are in a position to put aside some cash each month, claim they enjoy spending their money too much to save.

Following the Monetary Policy Committee to increase interest rates by a quarter of a per cent, IFA Promotion suggests now is a good time for consumers to start budgeting to save.

“The interest rate rise is minimal, but has met a shock reaction, which I hope will trigger people to finally take their heads out of the sand and act logically when it comes to their future financial security,” said David Elms from IFA Promotion.

“At the very least, it should deter people from unnecessary spending and the temptation of taking on new debt, but what we really need is a long-term commitment to saving. With the prospect of increased rates of returns, now is an ideal time to start.”

Make the best of your savings! Search UK Net Guide for a selection of the best offers on saving accounts!

Young people are being let down by their parents when it comes to personal finance, according to a recent survey.

Figures from National Savings & Investment (NS&I) revealed that more than a quarter (26 per cent) of parents had never discussed basic finances with their children.

As a result, many are approaching adulthood without a basic grasp of the value of money and how to earn it.

Furthermore, less than half of parents (48 per cent) said they had spoken to their children about budgeting, which is arguably the key area of managing your finances.

“The NS&I Summer Savings Survey reveals that although parents have good intentions, a significant proportion are failing to talk to their children about money,” said Dax Harkins, senior savings strategist at NS&I.

“With the financial pressures on the younger generation greater than ever, it is vital that we help educate children on money matters.”

Poor financial education has been blamed for rising levels of debt and a perceived lack of interest in long-term investments like pension schemes.