Teetering on the brink: most Scots one bill away from debt

Over half of Scots sometimes run out of money before payday

More than half of Scots (51%) say they occasionally run out of money before payday, with 15% saying they do so ‘most of the time’ or ‘always.’

The figures are part of a major new report published by Citizens Advice Scotland (see below) which aims to take a snapshot of the financial realities facing Scots in 2017, and in particular the relationship people have with debt.

Other key findings from the research, which was conducted by Ipsos Mori, include:

• 55% of Scots would be unable to pay a sudden bill of £100 without borrowing, using savings or cutting back on essentials. The equivalent figure for a £250 bill is 69%, and for £1,000 is 83%.

• Only 42% of Scots feel they understand their rights in relation to debt.

• Older people and those with full-time jobs are less likely to be in debt, but many Scots who are in work report that they often need to borrow to supplement their income.

• Those who are in work are just as likely to be refused credit as those not in work.

Publishing the report, ‘Living one payday to the next,’ CAS policy manager Keith Dryburgh said: “This study shows that for most Scots debt is just a fact of life. It also shows that debt is not just an issue for people who are on low incomes. Many working Scots on reasonable salaries occasionally need to borrow money to get them from one payday to the next.

“While many of these people would not regard this as a crisis situation, our research also finds that many people are vulnerable to financial shocks, like being unable to pay a sudden bill without getting into debt or using savings. And more than half of Scots are not familiar with their rights as debt consumers.

“Given that debt is so pervasive in Scotland, we are keen to make sure that people know their rights in relation to debt, and also know what options they have if they want to manage their finances better. We have information and tools on our website that will help anyone do this, and free impartial advice is also available at every local CAB.”

living_one_pay_day_to_the_next_report

New Year blues: sharp rise in household debt

New analysis published by the TUC shows that household debt rose sharply over 2016, with unsecured debt (debt other than mortgages) reaching new highs. The TUC says weak wage growth has left more families reliant on borrowing to support their living standards. Continue reading New Year blues: sharp rise in household debt

Easing the burden: funding extension for ‘crucial’ advice services

Successful projects that have helped people cope with issues such as debt, mortgage worries and benefit problems will continue thanks to £6 million of funding. Among those succesful projects is Granton Information Centre, who increased one client’s household income by a staggering £15,000. Continue reading Easing the burden: funding extension for ‘crucial’ advice services

Spend, spend, spend!

LOTHIAN RESIDENTS SPEND THE MOST ON NIGHTS OUT

New research compares the spending habits of Scotland’s key regions
Those living in Lothian spend the most money on going out
Lothian residents also spend the most money on themselves and their partners

People living in Edinburgh and the Lothian region spend the most money on going out, according to new research from the Bank of Scotland. Residents in Lothian topped the poll, spending an average £116 per month on nights out, according to Bank of Scotland’s How Scotland Lives report – £19 more than the national average spend.

Coming in second place, those living in Glasgow and Fife were both found to spend an average £104 per month on going out. While those in the Highlands & Islands came last, spending just £75 per month.

West Scotland and South Scotland also scored low on the report, with residents spending a mere £89 and £82 on going out.

The research also pinpointed Lothian as the region which spends the most amount of money on themselves and their partners, with residents forking out an average £98 per month – £14 more than the national average.

Central Scotland came second, spending £95 on themselves, and their partners. While South Scotland are the most frugal when it comes to splashing out on themselves and their partners, spending just £74.

As well as highlighting Lothian’s sociable side, the research report has also provided a comparison of what Scotland’s key regions spend more on, compared to other regions.

Residents in Aberdeen come out on top for rent, mortgage and car payments, while those living in Dundee spend the most amount of money on shopping for children.

Those living in Glasgow were found to spend the most on insurance premiums, while Highlands & Islands residents were revealed as spending the most amount of money on debt payment – and adult care costs.

A full snapshot of Scotland’s key regional spending habits:

Region	What it spends more on compared to any other Scottish region*	Mean expenditure (per month)	Comparison to the national average spend (£)
Glasgow	Insurance premiums	£115	£8 more
Lothians	Going out	£116	£19 more
Lothians	Shopping for themselves/a partner	£98	£14 more
Highlands & Islands	Paying off debts	£276	£50 more
Highlands & Islands	Adult care costs	£205	£66 more
Dundee & surrounds	Shopping for children	£102	£14 more
Aberdeen & surrounds	Mortgage and rent payments	£527	£104 more
Aberdeen & surrounds	Car payments	£182	£36 more

Scotland’s debt doubts

In addition to providing a snapshot of Scotland’s regional spending habits, the How Scotland Lives research report has highlighted the debt faced by many across the country.

In particular, 46% of Scots are carrying over at least some form of debt from the previous month.

More than half of debtors indicated they were concerned with their current financial position. This is particularly the case among 35-45 year olds, with 30% believing they will always be in debt.

Rachel Bright, Head of Customer Services at Bank of Scotland said: “While other regions spend more on necessity costs such as insurance premiums and debts, Lothian comes out on top for just wanting to have a good time.

“The research also paints a picture of the level of consumer debt in Scotland. It’s concerning that almost half of Scots aren’t paying off their debts from previous months and we would always encourage people to look at other areas to see if they can make savings that will allow them to pay off more debt.”

Debt charity workers braced for busiest day

Debt charity workers expect today (Monday 15 February) to be their busiest day yet, following a record-breaking start to 2016. Continue reading Debt charity workers braced for busiest day

Putting a CAP on credit at Christmas

Charity offers top five frugal festive tips!

Christians Against Poverty’s (CAP’s) three Edinburgh debt centres in Tollcross, Edinburgh North and Wester Hailes have joined forces to release their top five ways to have a perfect Christmas without resorting to credit.

The team have compiled the advice so families can avoid seasonal slip-ups that can result in a miserable New Year where debts can spiral.

Edinburgh North CAP Centre Manager Claire Baggaley said: “We’ve put out this advice because we know what huge pressure there is to buy lots at this time of year and we want to be a voice saying that it’s OK not to spend loads – especially if money is already tight.

“None of your family and none of your friends want you to struggle through January and February with essentials like paying your household bills because you spent lots on them.

“If you are thinking of a Christmas loan or maxing out the credit cards or overdraft, please re-consider and take action to avoid worry in 2016.”

Wester Hailes CAP Centre Manager, Margaret Farquhar added that if anyone is already struggling with debt to seek help from one of the free debt agencies. CAP is one of these and can be contacted on 0800 328 0006.

Talk to friends and family as soon as you can. Set a limit on what you spend, agree to do a family secret Santa where you all only buy one thing or agree to buy just for the children. If a child has their heart set on one big present, see if relatives will club together with you.
Be bold if you’re doing the cooking this year and ask family if they would contribute something. Ask, “Can I leave you in charge of bringing the Christmas crackers/cake/pudding/drinks?”
If there are people you really want to thank with a gift, consider making them something: Christmas biscuits, tablet, mince pies or home-made decorations for the tree. A home made gift and a thank you card will go a long way.
Gift your time or talents in the form of a home-made voucher promising to bake their favourite cake on demand, do an hour’s ironing, babysitting, car wash or winter car check.
Grasp every free activity going in your local community. Be there for the local Christmas lights switch on; attend the nativity at your kids’ school; see what your local church has on offer. See what you can do to help others and share the Christmas spirit.

New debt law comes into force today

New legislation aims to help the most vulnerable

New legislation comes into force today (Wednesday, April 1) which sees Scotland introduce one of the most modern systems of debt advice and debt management in the world.

The Bankruptcy and Debt Advice (Scotland) Act introduces a suite of measures, including the Minimal Asset Process, which offers debt relief quickly and at less than half the cost of an application for bankruptcy under the previous equivalent scheme for those on low incomes.

Accountant in Bankruptcy will oversee implementation of the new law, which has been designed to balance the rights of those in debt with the needs of creditors and businesses.

The introduction of the legislation is the latest element in the Scottish Government’s vision of a Financial Health Service for Scotland, which commenced with the launch of the Scotland’s Financial Health Service web portal in December 2014. The site is a one-stop shop for advice on a range of money issues, signposting users to organisations offering information and advice on debt, managing money, housing, homelessness and ethical lending.

Other measures as part of the new legislation include:

Mandatory money advice for people seeking access to statutory debt relief instruments such as sequestration (the equivalent term in Scotland for bankruptcy) to ensure debtors are matched with the solution that best fits their needs and circumstances

Compulsory financial education for those who have been sequestrated more than once to help with their financial rehabilitation and prevent future financial difficulties

Introduction of a Common Financial Tool for money advisers, allowing them to quickly assess whether individuals can contribute towards repayment of their debts and what the level of their contribution should be

A new web-based bankruptcy application system

Creditors are obliged to submit claims no later than 120 days after notification by the trustee

Business Minister Fergus Ewing said: “This new law places Scotland firmly at the forefront of efforts on how to help some of the most financially vulnerable in society.

“These measures have been developed following years of consultation with experts across the financial advice community and from studying how other nations deal with issues of personal debt.

“It is only proper that we seek to do everything we can to help financially rehabilitate families and individuals on low incomes and with little by way of assets who are struggling with debt, while still offering a fair deal for those owed money.

“Taken as a whole, this pioneering legislation seeks to bring dignity to those people in Scotland seeking to break the cycle of debt once and for all.”

New Year resolutions – and how to keep them

It’s a tradition on New Year’s Eve that you make a resolution for the year ahead. Some people pledge to lose weight, others decide to stop smoking and lots more say they are going to get fit and more active – but all too often you break that resolution just a few weeks into the New Year.

If you’ve made a New Year’s resolution – and you’re really, really determined to stick to it this time! – here’s some help and advice to assist you on your journey.

Maybe this time …

1. LOSE WEIGHT and/or GET FIT

One of the most common New Year resolutions is to eat better, exercise more and lose weight. After all of the rich and indulgent feasts you’ve had this holiday season, it might seem easy to stick to a diet of leafy greens at first. But when those cravings set in, it can be hard to stay on track with your diet. Plus, cold weather makes it harder for some people to get motivated and hit the gym.

If you’re looking to eat more healthily, ignore faddy diets – portion control will play a big part in your success. One good way to be more aware of what you’re eating is to use a kitchen scale to measure ingredients or weigh out portion sizes. A solid kitchen scale shouldn’t cost the earth and it’s an investment worth making.

Check out the library for books on good food and healthy eating, and Pilton Community Health Project’s website is a mine of useful information too www.pchp.org.uk

Many people sign up for a gym membership at this time of year but for a considerable number that’s as far as it goes – it can be hard to get motivated to leave the house on cold January days and evenings; it’s so much easier to put it off to another day! Gym memberships can also be very expensive – again, Pilton Community Health should be your first port of call for local exercise and healthy activities.

With Ainslie Park Leisure Centre on your doorstep (551 2400) it’s worth checking out Edinburgh Leisure to see what’s on offer both locally and across the city: telephone 458 2100 or visit www.edinburghleisure.co.uk

If you need a little reminder to be active, a fitness tracker like the Fitbit Flex can be a big help, but starting at around £50 they are quite an expensive reminder! I find trying to tie my shoelaces is enough of a reminder for me …

2. QUIT SMOKING

You know smoking is a bad habit that hits both your health and your wallet, but stopping is tough – it can take some people years and many, many failed attempts before they kick the habit. If you want 2015 to be the year you finally quit smoking, there are all kinds of products that can help wean you off the fags: there’s gum, patches and nasal spray inhalers – all of which help give you a boost of nicotine without having to inhale all that nasty smoke.

Many are turning to e-smoking as an aid to kicking the tobacco habit. If you’re looking to try out e-cigs as a way to cut back on actual cigarettes, you can now get a starter kit, charger, and carrying case set at increasingly competitive prices.

People who are trying to quit smoking the traditional way also appreciate having additional support options, and Allen Carr’s Easy Way to Stop Smoking book is still the most popular on the market.

NHS Lothian offers a range of stopping cessation sessions and Smokeline Scotland is also a great place to go for support, advice and tips.

http://www.nhslothian.scot.nhs.uk/HealthInformation/HealthAwareness/Smoking/Pages/default.aspx

Smokeline 0800 848484 www.canstopsmoking.com

3. SAVE MONEY AND REDUCE DEBT

Whether you want to get out of debt or just start saving for a big ticket item, there are lots of people who will be trying to spend their money more wisely in 2015. Setting up a personal budget can help you monitor your spending.

One tactic you can try to help you stay on budget is doing all your shopping in cash when you can, rather than using a debit card, cheque or credit card to pay for items – it’s estimated that people who pay for things with a card can spend almost 20% more on a transaction than those who are paying with cash.

If you’ve racked up a lot of debt on a credit card and you’re paying a hefty rate of interest, you should look around to see what deals are on offer and transfer that debt over to a 0% balance transfer credit card. By doing so, you’ll be able to avoid paying interest on that debt for a set period – some up to 35 months – and this will give you plenty of time to start tackling your debt without worrying about the interest accumulating.

The Money Advice Service has a good website for money saving advice, but if you are already in debt – get help, don’t let your problems escalate. Pilton CAB and Granton Information Centre are two local agencies that can help.

Don’t be tempted by payday loans or worse – the interest is astronomical. Check out Credit Unions which are a much cheaper and ethical way of helping you to manage your money.

Remember, if you spent too much over Christmas those bills will be arriving soon, so ACT NOW.

www.moneyadviceservice.org

www.moneysavingexpert.com

www.capitalcreditunion.com

North Edinburgh Credit Union, Wardieburn Drive 466 5006

Granton Information Centre, West Granton Road www.gic.org.uk 551 2459

Pilton CAB, Drylaw Shopping Centre on Ferry Road 202 1153 www.citizensadviceedinburgh.co.uk/

The Scottish Government has also just launched a new website to help guide you to the support and advice you need. Visit:

http://www.lightentheloadscotland.gov.uk/

4. LEARN A NEW LANGUAGE or SKILL

It’s never too late to learn something new and the New Year is the perfect time to try something different, whether for leisure or to open up new employment opportunities.

Locally, check out Edinburgh College – new courses start this month – and Craigroyston Community High School is running a wide variety of adult day and evening classes.

www.edinburghcollege.ac.uk

www.edinburgh.gov.uk/info/20070/adult_and_community_learning

5. GO GREEN

Thinking about going green this year? There are lots of small changes you can make to your lifestyle to reduce your energy bill, recycle materials in innovative ways and help do your part to make the planet healthier. www.greenerscotland.org is a good place to start for ideas.

6. VOLUNTEER and/or GIVE TO CHARITY

Many people plan to be more generous with both their time and any disposable income they may have in 2015 (some chance, I hear you say!)

Looking to donate time, not money, then? There are lots of ways you can donate your time – local and national charities and voluntary organisations are crying out for willing volunteers in all sorts of roles. There’s bound to be something to suit you – a good place to start is Volunteer Centre Edinburgh – go to www.volunteeredinburgh.org.uk to see what you can do.

Time Banks are another great way to donate your time, energy and skills and get the same back in return – visit www.edinburghtimebank.org.uk for more information.

So, you’ve decided on your resolution? Here are some tips to help you stay on track when times get tough:

Set yourself realistic goals, not impossible targets. Don’t think about losing two stone in a month, or running a marathon after a fortnight’s exercise!
Don’t be all-or-nothing – you’re likely to have the odd slip along the way but don’t allow that to make you give up
Remove temptation – no point in making things even more difficult for yourself
Reward yourself along the way
Thing positively and keep your eye on the prize – there may be tough times but the end result will be worth it!

GOOD LUCK!

Lighten the Load: help to deal with debt

Campaign to highlight money advice service launched

A campaign to signpost people struggling with debt to the full range of money advice services available has been launched by the Scottish Government.

The Lighten the Load campaign raises awareness of the Scotland’s Financial Health Service website, which provides links to bodies offering information and advice on debt, managing money, housing, homelessness and ethical lending, encouraging those with money worries to take the first steps towards regaining control of their finances.

The campaign, which is aimed at people from all walks of life in Scotland seeking credible answers to issues connected with debt and money, includes a new television advertisement themed around how everyday tasks become more difficult when people are burdened with debt.

The Scottish Financial Health Service website was created by the Accountant in Bankruptcy and was launched by Business Minister Fergus Ewing in December.

Mr Ewing said: “January can be a difficult time for families when the bills associated with the festive period start to come in, but it can also be a time when people turn their attention to their finances for the year ahead.

“This campaign is intended to encourage people to access the full range of financial advice services available to help them manage their money in the months ahead.

“Since it was launched by Accountant in Bankruptcy last month, Scotland’s Financial Health Service has already been making a difference to people seeking guidance on how to prevent worries about money turning into a crisis.

“Launching this campaign will empower even more people to lighten their own money load and take back control of their finances.”

As well as providing access to debt support services, the Scotland’s Financial Health Service website also signposts users to practical credit and protection solutions offered by credit unions across Scotland.

Frank McKillop, Policy Manager at ABCUL Scotland (the Association of British Credit Unions Limited), said: “Helping people get – and stay – on top of their finances is a key part of what credit unions are all about.

“We welcome this campaign, and hope that through Scotland’s Financial Health Service, more people from all walks of life will turn to credit unions and take a responsible approach to saving, borrowing and budgeting.”

Scotland’s Financial Health Service website is available from today at:

http://www.lightentheloadscotland.gov.uk/

Relief for payday loan customers as costs are capped

‘Today’s crackdown on the payday lending market comes not a moment too soon’

A cap on the cost of payday loans has come into effect. Payday loan rates will now be capped at 0.8% per day of the amount borrowed, and no-one will have to pay back more than twice the amount they borrowed.

The Financial Conduct Authority (FCA) said those unable to repay should be prevented from taking out such loans.

Payday loan customers will see the fees and interest they pay capped from today amid moves to stop such debts spiralling out of control.

The new rules mean that people using payday lenders and other short-term credit providers will see the cost of their borrowing fall – and those who cannot afford to repay their debt on time will never pay back more in charges than the sum they initially wanted to borrow.

For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.

The Financial Conduct Authority (FCA), which oversees the industry, said the move will lower costs for most borrowers and ensure that charges are proportionate to the size and duration of the loan.

Default fees for borrowers who fail to repay on time will be capped at £15 under the measures, which are the latest in a string of clampdowns on the much-criticized sector.

The new rules mean that, for example, if someone borrows £100 for 30 days and pays back on time, they will not be charged more than £24. Someone who borrows £100 but struggles to repay their debt will never pay back more than £200, including fees and charges.

Short-term lenders said the caps will lead to fewer people getting loans from a smaller group of lenders. They said that initially at least, the cost of a payday loan will generally be at or near the cap.

Stricter rules for credit brokers are also being applied from today. Concerns have been raised that consumers have often mistaken credit brokers for lenders.Royal Bank of Scotland (RBS) recently highlighted a case involving someone looking for a £100 loan who ended up being charged £700 because their details were passed to 10 different middlemen firms.

The FCA has previously seen evidence of fees being taken by credit brokers without informed consent and under hidden or misleading terms and conditions. Under the new rules, a firm will not be able to request a consumer’s bank details or take a payment without their explicit consent first.

Martin Wheatley, chief executive of the FCA, said the payday loan cap will make the cost of a loan cheaper for most consumers.

He said: “Anyone who gets into difficulty and is unable to pay back on time, will not see the interest and fees on their loan spiral out of control – no consumer will ever owe more than double the original loan amount.”

Consumer group Which? said its 2014 research found that an average of 880,000 households took out a payday loan each month.

It’s ‘Clear Up Credit” campaign said the regulator should look to make it easier for people to compare the cost of different types of debt, including unauthorised overdrafts and credit cards.

Which? executive director Richard Lloyd, said: “Today’s crackdown on the payday lending market comes not a moment too soon. Lenders must now start competing on price and treating their customers fairly.

“The regulator has clearly shown it’s prepared to take tough action to stamp out unscrupulous practices, and they must keep the new price cap under close review. It’s now time to turn the spotlight on unfair practices in the wider credit market.

“We want to see an end to excessive fees that also make it hard to compare different loans, including those charged for unauthorised overdrafts and credit cards.”

The payday loans industry has undergone a series of shake-ups since coming under the regulation of the FCA last April.

The Office of Fair Trading, FCA’s predecessor body, expressed concerns that some payday firms appeared to base their business models around people who could not afford to pay back their loans on time, meaning the cost of the debt ballooned as they were forced to ‘roll it over’ – and extra fees and charges were added on top.

After coming under the FCA’s supervision, payday lenders were banned from rolling over a loan more than twice and and they can only now make two unsuccessful attempts to claw money back out of a borrowers’ account.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents short-term lenders, said: ” This is the start of a new era for short-term lenders who are operating in an entirely new lending landscape under the FCA.

“We expect to see fewer people getting loans from fewer lenders and the loans on offer will evolve but will fully comply with the cap.

“The commercial reality is that the days of the single-payment loan are largely over – payday loans are being replaced by higher value loans over extended periods.

“Initially, prices of loans will be at or near the cap. In time we may see risk-based pricing, but innovation could be stifled by the threat of the regulator as lenders seek FCA authorisation.”

The FCA said the reforms needed time to bed down before their effect was assessed but that it would be monitoring the situation carefully. The reforms will be reviewed in two years.