Just very recently banks are again the topic on the news. The banks face another billion pounds of claims against them for misselling to the public. The claims are no longer against ppi (payment protection insurance) but against pba (packaged bank accounts). What happened decades ago with ppi are now repeating itself with pba. This latest round of complaints may be worst than ppi. Almost all citizens have a bank account, so the scope of the complaints may be bigger and may involve millions of consumers.
Banks Make Innovative Product
When it comes to making innovative financial products, nothing can beat banks. They have a product from a simple savings account to a complex financial trading account. When banks make products, the ultimate goal is to add to the bottom line. The way to do this is to package certain products where a potential monthly income comes in. This is what happened to packaged bank accounts. It is just an ordinary account but added with certain trimming to make it attractive. In the end the consumer pays more than less for these types of bank accounts.
Bank Products Are Designed to Earn
Banks earn either by charging interest, charging monthly fees or charging service charges. They can utilize it to good effect more so if you do not check your bank statements and do not question the charges. Very few consumers challenge the charges made by banks in bank statements. Even if banks charge just a few pounds per consumer or per transaction this can translate to billions over the course of a year due to the large number of bank depositors.
Bank Need to Sell Their Products
Since banks need to sell their products and they train bank personnel to exactly do that. When you go to the bank with the intention of opening a bank account, bank personnel will not recommend the basic, ordinary account. They do not earn much from those types of accounts. What they will recommend to is are packaged bank accounts. These accounts are more active and give more income to the bank. Some banks give monetary incentives to employees who sell packaged bank accounts. What happens is that even if you intend to open an ordinary account you will end up with a packaged account.
Banks End up Misselling
If banks make innovative products and they have the bottom line in sight at all times, and they sell those products first to the consumer, they the possibility of misselling is very high. One of the main characteristic for a financial product to be missold, is that it proved unsuitable to the consumer. If all that bank personnel push is packaged accounts then the possibility of misselling is there right at every transaction.
The banks face another billion pounds of claims against them for misselling to the public due to this practice. Currently, there are talks that this financial fiasco may be bigger than payment protection insurance, where banks got penalized millions of pounds for misselling to the public.
Owning a home is seldom done on cash payments. Most are owned through a mortgage due to the amount that is involved. This is one reason why getting the best deals on mortgages may be a worthwhile activity. Home loans and mortgages can work on your favour if you scrutinize little details that may affect certain factors in the mortgage. Since it is your money that you will be using to pay the monthly payments, interest and bank fees, you might as well use every available option to work on your favour. Look for the lowest interest rate and bank fees and the best term.
Look for the Best Terms
The terms of a home loan or mortgage can affect all the other factors. Even if you have a low interest rate but if the term is too long, the effective interest rate will be high. The usual term is three years, five years and ten years. This usually applies to both fixed rate and standard variable rate mortgages. Currently banks are giving out flexible terms for those who pass their credit checks. It may also be a good time to secure a mortgage because consumer advocates say this time can be the best time to experience the best terms.
Look for the Best Interest Rate
The best interest rates are available right now from many banks. Banks have been competing in giving out the best interest rates possible. You need to understand that when look for the best rate, it is equally affected by how much deposit you are going to make. The standard deposits are 10, 15, 20 and 30 percent. If you make a deposit of 40 percent today, the bank might give you the lowest interest of 0.99 percent. But if you just make a 5 percent deposit, which some bank accept, you can never negotiate for the best interest rate. The bigger the deposit, the lower the risk for the bank and so they can give away some percentage as discount.
Look for the Lowest Fees
Banks make money using two different methods. One method is through the monthly interest that you will be paying. The other method is to through bank charges and fees. If you are not careful and you do not check the documentation, some banks charge you so many fees. They can charge you for application, documentation, audit and miscellaneous fees. If you add these to the monthly interest on your first month of application, the effective rate of interest will climb up.
Getting the best deals on mortgages today can be an intelligent undertaking. You do not need to jump right into the first bank that offers you a seemingly cheap mortgage rate. There are other factors that you need to consider. Calculate the easiest term that you can handle. If you can afford it, the shorter term is the better. You can calculate your saving of a five-year mortgage in contrast to a ten-year mortgage. The advice from financial consultants is to compare and make an intelligent choice.
The current position of the UK economy reflects both positive and negative figures. These figures have a dramatic effect on some sectors and a subtle effect on others. The current climate of the world economy is characterized by change and volatility. Markets open and then disappear but new markets also emerge. This is the current scenario.
While we may not understand fully the effects of the increase or decrease in national figures what we may see is the effect. An example is the weakening of the currency. If the Pound loses its value by a certain percentage it directly affects the prices of oil and prime goods. Consumer goods increase in prices together with prices of petrol.
The Pound is Losing Value
The picture of the pound in the UK economy is that it is losing value in relation to other currencies. The lost value is not significant but the effect is various sectors of society may be unpredictable. Imported raw materials may increase triggering increases in manufactured goods. Other areas of the economy may be affected also.
On the other hand, a weaker pound may strike back at exports. Export prices will become cheaper and will create demand for UK made products. The products have a worldwide reputation of durability, excellent design and exemplary workmanship. One value lost in one area may be a gain in another area. That is how it goes with economics.
Manufacturing is Weak
The manufacturing in the UK economy is experiencing a weakening due to the onslaught of competition from the Euro Zone. Product costs in the Euro Zone have become cheaper making locally made items more expensive than the competition. The wages on the UK are also much higher attributing to higher labour and production cost. Even with this set back, exports in manufacturing products will continue to provide the necessary balance.
National Growth Rate Up
The UK economy looks rosy on the national growth rate segment. The rate is up by one percent. This means that inflation is checked and that industrial sector may move up anytime. This also means that locally made product may rise in cost by a very small percentage. There is probably no price increase to speak of.
With the unemployment rate down expect more cash in circulation. The retail sector will be alive with people having money to spend during the weekends. When the unemployment rate is down, most of the citizens are in a joyful mood. There is less stress to people caught in traffic and in other busy area. Summing it all up, the UK economy may not be at its best but the picture is bright.