Archive for April, 2009

Plastic bag charge hailed as huge success

Thursday, April 30th, 2009

Marks & Spencers’ 5p charge on carrier bags has seen an 80% reduction in their use in the first year

Jim Royle of BBC’s The Royle Family was scandalised at the thought of paying 5p for a carrier bag, but the introduction of charges for single-use bags has been a huge success, according to figures from high street retailers.

They reveal that high profile campaigns and fashion-statement alternatives to plastic, combined with charges and incentives such as Green loyalty points have helped some retailers cut bag use by as much as 85%.

Since launching a 5p charge for food bags last May as part of its Plan A scheme to reduce waste, Marks & Spencers says the number of bags taken to cart posh ready meals home has fallen by 80%, from 460m bags a year to 80m. The National Trust, which introduced a charge on 1 May last year in its shops and garden centres, has managed to slash plastic bag usage by 85%, or 1m bags a year. It said just 5% of its customers were now taking the disposable option.

“We are really pleased at how quickly customers have reacted and adapted their shopping habits by investing in durable alternatives in which to carry their purchases,” said the National Trust’s Stuart Richards, adding that in the trust’s shops, sales of reusable jute bags have soared as plastic bag use has fallen away.

Marks & Spencer has also managed to persuade its customers to remember to take along their own bags when they hit the shops. “The main driver for the reduction is people bringing in an alternative bag, either a plastic bag for life or cloth bag with them when they shop with us and we have encouraged them to do so through regular bag for life giveaways,” a spokeswoman said.

M&S is among 22 high street names that signed up to a target of reducing the environmental impact of bag use by 25% by the end of last year. They managed to exceed the target, cutting waste by 40%, and are now working towards halving bag use from 2006 levels by the end of May. While some opted to charge for bags, others went for a carrot rather than a stick.

Retailers who have incentivised customers to reuse bags have also seen success. Tesco, which offers one Green point to its clubcard customers for every bag they reuse, says it has cut bag use by 50% since it launched the scheme in August 2006, saving 3bn bags in the process. In the past year alone, 1.8bn bags have been saved. Sainsbury’s, which has also offered extra loyalty points to customers, will not reveal how many bags it has saved, but says experiments such as sending text messages to customers to remind them to bring a bag when they go shopping had proved successful.

Figures from the Waste & Resources Action Programme show the total number of bags in circulation fell from 13.4bn in 2006 to 9.9bn last year, however that still represents 400 per household. The Department for the Environment Food and Rural Affairs recently launched the “get a bag habit” campaign to remind people to reuse bags rather than hoarding them in drawers and under the sink. It estimates the voluntary targets set by retailers will result in a reduction of around 5bn bags a year in England, Wales and Northern Ireland, and will eventually save 130,000 tonnes of CO2 – equivalent to taking 41,000 cars off the road each year.

  • Consumer affairs
  • Waste
  • Plastic bags
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Plastic bag charge hailed as huge success

Thursday, April 30th, 2009

Marks & Spencers’ 5p charge on carrier bags has seen an 80% reduction in their use in the first year

Jim Royle of BBC’s The Royle Family was scandalised at the thought of paying 5p for a carrier bag, but the introduction of charges for single-use bags has been a huge success, according to figures from high street retailers.

They reveal that high profile campaigns and fashion-statement alternatives to plastic, combined with charges and incentives such as Green loyalty points have helped some retailers cut bag use by as much as 85%.

Since launching a 5p charge for food bags last May as part of its Plan A scheme to reduce waste, Marks & Spencers says the number of bags taken to cart posh ready meals home has fallen by 80%, from 460m bags a year to 80m. The National Trust, which introduced a charge on 1 May last year in its shops and garden centres, has managed to slash plastic bag usage by 85%, or 1m bags a year. It said just 5% of its customers were now taking the disposable option.

“We are really pleased at how quickly customers have reacted and adapted their shopping habits by investing in durable alternatives in which to carry their purchases,” said the National Trust’s Stuart Richards, adding that in the trust’s shops, sales of reusable jute bags have soared as plastic bag use has fallen away.

Marks & Spencer has also managed to persuade its customers to remember to take along their own bags when they hit the shops. “The main driver for the reduction is people bringing in an alternative bag, either a plastic bag for life or cloth bag with them when they shop with us and we have encouraged them to do so through regular bag for life giveaways,” a spokeswoman said.

M&S is among 22 high street names that signed up to a target of reducing the environmental impact of bag use by 25% by the end of last year. They managed to exceed the target, cutting waste by 40%, and are now working towards halving bag use from 2006 levels by the end of May. While some opted to charge for bags, others went for a carrot rather than a stick.

Retailers who have incentivised customers to reuse bags have also seen success. Tesco, which offers one Green point to its clubcard customers for every bag they reuse, says it has cut bag use by 50% since it launched the scheme in August 2006, saving 3bn bags in the process. In the past year alone, 1.8bn bags have been saved. Sainsbury’s, which has also offered extra loyalty points to customers, will not reveal how many bags it has saved, but says experiments such as sending text messages to customers to remind them to bring a bag when they go shopping had proved successful.

Figures from the Waste & Resources Action Programme show the total number of bags in circulation fell from 13.4bn in 2006 to 9.9bn last year, however that still represents 400 per household. The Department for the Environment Food and Rural Affairs recently launched the “get a bag habit” campaign to remind people to reuse bags rather than hoarding them in drawers and under the sink. It estimates the voluntary targets set by retailers will result in a reduction of around 5bn bags a year in England, Wales and Northern Ireland, and will eventually save 130,000 tonnes of CO2 – equivalent to taking 41,000 cars off the road each year.

  • Consumer affairs
  • Waste
  • Plastic bags
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One £285m mortgage rescue scheme. One family helped

Thursday, April 30th, 2009

It was announced with much fanfare in September at the height of the banking crisis – the government’s big idea to stop vulnerable people being thrown out of their homes. But yesterday it emerged that the mortgage protection scheme has so far helped just one family across the whole of the UK.

The scheme, part of a package of emergency measures rushed in last autumn after months of tumbling house prices, has been “operational across the country” since January, according to the local government department; yet data published on its website yesterday showed that just one homeowner, in the east of England, has qualified.

The shadow housing spokesman, Grant Schapps, seized on the figures, saying they revealed the rescue scheme, which was expected to cost ?285m and help 6,000 families over the next two years, to be a sham. “Thousands of families have looked to Gordon Brown for help to survive his recession and he’s looked the other way. He got us into this mess and he needs to help ordinary families through it,” he said.

A government spokesman said local councils were now actively considering applications for the scheme from more than 450 other families, and insisted it had always expected it to take three months to get off the ground.

Under the scheme, homeowners struggling with their repayments should be able to sell a share of their property – or all of it – to a social landlord and rent it back, enabling them to stay in their home instead of facing repossession.

With the Council of Mortgage Lenders predicting as many as 75,000 repossessions in 2009, Alistair Darling made a series of changes to the scheme in the budget. They will come into effect next month and should increase the number of homeowners who could qualify.

The government is keen to nurse the housing market back to health and give voters back the feelgood factor. The chancellor also extended the stamp duty holiday for buyers of properties worth ?175,000 or less and he is encouraging the nationalised lender Northern Rock to expand its mortgage book, helping to boost loans to first-time buyers.

But yesterday brought fresh evidence that there is little sign of a let-up in the housing downturn. Data from the Nationwide showed that prices slipped back by 0.4% in April, wiping out some of the surprise 0.9% gain in March, which was viewed at the time as evidence of a spring bounce. The renewed decline brought the average cost of a home in the UK down to ?151,861 – 15% lower than in April last year.

Ed Stansfield, property economist at Capital Economics, said: “Rising unemployment and widespread pay freezes will mean that prices fall considerably further.”

  • Mortgages
  • Recession
  • Credit crunch
  • Housing market
  • Property
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Stockmarkets hit four-month high

Thursday, April 30th, 2009

Leading City analysts shrug off poor growth figures and fears of swine flu pandemic to hail surge in equities as end of recession

A surge in equities which has seen share prices rise more than 20% since their trough in early March will put one of the City of London’s oldest pieces of homespun wisdom to the test when a new month’s trading begins tomorrow.

Judging by the way in which those eager to pick up stock at bargain prices have been shrugging off every piece of recent bad news, they have no intention of listening to those who say “sell in May and go away”. Less than two months after the world’s bourses were gripped by existential despair, there is now talk of them being on the brink of a new bull market.

In the past week, the optimists have shrugged aside plenty of bad news – the growth figures from the US and Britain, the potential swine flu pandemic and unemployment in the eurozone at a 44-month high – to power world stockmarkets to their highest level in four months.

Mike Lenhoff, chief strategist at Brewin Dolphin in London, said the reaction of the markets was significant. “Equity markets are paying far more attention to forward-looking indicators, such as various measures of business sentiment, a number of which have been better than expected, and far less attention to backward-­looking numbers. Two good and very recent examples of the latter are the US and UK first-quarter GDP [gross domestic product] figures, both of which were worse than expected and both of which the markets promptly dismissed.”

There is a precedent for looking forward rather than back. In 1982, when the US economy was in deep recession courtesy of Paul Volcker’s strong anti-inflationary measures, share prices started to rise; although few would have thought so at the time, the rally developed into the longest and biggest bull market there has ever been.

Sensing that history may be about to repeat itself, some investors are keen to join the party early.

Anthony Bolton, president of investments at Fidelity International, said on Wednesday: “All of the things are in place for the bear market to have ended.” Speaking on Bloom­berg TV, he added: “When there’s a strong consensus, a very negative one, and cash positions are very high, as they are at the moment, I’d like a bet against that.”

Investors who caught the tide at its maximum ebb in early March have seen some impressive returns. The share price of Barclays has risen almost six-fold to 280p since its trough of 51p and Crispin Odey, of Odey Asset Management, said the wipe-out of so much capacity among lenders had left those institutions still standing able to widen their profit margins.

“Opinion is divided over whether this is a bear market rally or the beginning of a new bull market. I think it has the chance to be a new bull market,” said Odey.

Despite the buoyant mood of recent days, there are still plenty of analysts willing to point out that some of the most impressive increases in share prices happened between 1929 and 1932, a period when the Dow Jones industrial average dropped by 89%.

George Magnus, senior economic adviser at UBS, gave short shrift on Wednesday to those eager to call the end of the recession and the return of the good old days in the financial markets. The green shoots the bulls were getting excited about, he said, were the result of the end of a savage period of global de-stocking and the limited impact of higher borrowing rather than the increase in capital formation necessary for a sustained recovery.

“Second, a sustainable expansion needs a very substantial building block to fall into place. The precondition for this is financial stability. By this we mean viable, profitable banks that do not depend on state life-support for their funding and capital needs, and two-way markets that work within the context of orderly risk premiums.”
The gap between the bulls and the bears is wide. As Lenhoff said, the increased appetite for risk among bulls is based on a belief that policy stimulus will not only work but is already working. The bears think this is something longer, deeper and more fundamental than any of the previous post-war recessions. The next six months will determine who is right.

  • Market turmoil
  • FTSE
  • Financial crisis
  • Economics
  • Credit crunch
  • Investing
  • Shares
  • Investments
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Botox injections for sale on the internet

Thursday, April 30th, 2009

Which? Computer survey finds potentially lethal ‘cosmetic enhancement’ products including Botox and Melanotan readily available online

Do-it-yourself Botox kits and illegal tanning injections are for sale on the internet prescription-free.

An investigation carried out by Which? Computing found Botox kits being sold on eBay, while Melanotan jabs, which claim to give users a tan, were available on a UK-based website.

The wrinkle-filler Botox packs contained Botox powder, saline, needles and a face map showing where to inject the drug.

The seller, based in Texas in the US, was offering the DIY kits for $95 (around £65) and was prepared to ship the product to buyers in the UK. Botox clinics typically charge between £110 to £400 an injection.

Posing as a potential buyer, Which? Computing contacted the seller, who told the magazine: “If you are afraid of injections there is a product called Inject-Ease that makes injecting a no-brainer.”

In 2007, 55,000 Botox injections were administered in the UK. Experts say injecting the prescription-only drug without medical expertise is dangerous.

Malti O’Mahoney, an aesthetic nurse who has been a Botox practitioner in London for 10 years, said: “If you did it yourself with Botox you could end up paralysing your whole face. Facial muscles are very complex and a lay person would not know this. It is a full medical procedure, requiring a patient’s medical history and detailed consultations before any treatment takes place.”

Sarah Kidner, editor of Which? Computing, said: “It’s easy to forget that Botox is actually a poison. We were appalled that we were able to buy a DIY kit so easily and are concerned that the internet is becoming a marketplace for cut-price cosmetic treatments.”

Ebay removed the seller’s advert immediately after being contacted by Which? investigators.

Melanotan injections are illegal in this country due to safety fears. But the Which? Computing team found the jabs for sale at £31 on a UK-based website, along with instructions on how to inject them into the stomach. The website, Melanotan-Maverick.com, has since been shut down by the UK Medicines Healthcare products Regulatory Authority (MHRA).

To date, the MHRA has closed 18 websites selling Melanotan, but says it does not have jurisdiction over companies that operate in the US and distribute Botox in the UK.

  • Consumer affairs
  • Health & wellbeing
  • Beauty
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Guardian and Observer success at awards ceremony

Thursday, April 30th, 2009

Both the Guardian and Observer personal finance sections were toasting their success at a ceremony in London last night

It was a triumphant night at the headlinemoney awards yesterday, with the team picking up two awards. The weekly Guardian Money section was voted Title of the year, while head of consumer, Jill Insley, picked up the Consumer journalist of the year award.

The judges, which included members of the finance industry and journalists, said Guardian Money was “the most fresh and original of the national personal finance sections, it always finds a new angle.” The panel commended the range of topics covered by the section and the way subjects were perfectly angled at the paper’s readership.

Jill Insley won her prize for pieces written while she was editor of the Observer Cash section, with the judges impressed by articles which revealed how thousands of carers faced losing their homes to pay IHT bills when a loved one died; how domestic violence is often reinforced by financial control over a victim; and how a debt epidemic is spreading to Britain’s middle class. “These pieces are quite different from nearly everything else we’ve seen,” said one judge. The panel concluded: “She consistently tries to put right financial wrongdoings.”

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House prices resume decline

Thursday, April 30th, 2009

• House prices fell by 0.4% in April, Nationwide says
• Figure partially reverses surprise increase seen in March

House prices fell by 0.4% in April, reversing some of the surprise 0.9% rise in March, the Nationwide building society said today.

The return to falling prices brought the average cost of a home in the UK down to £151,861 – 15% lower than in April last year.

The society said there were signs that the pace of decline was easing, with the three-month rate of change, which is a better indication of trend than the one-month figure, falling from -4.1% in March to -3.1%.

However, it said it was too early to talk of a housing market revival. Nationwide’s chief economist, Fionnuala Earley, said that although falling house prices had made homes more affordable to first-time buyers, caution about the future direction of the property market was still restricting activity.

She said the decision to keep the stamp duty threshold at £175,000 until the end of the year, announced in last week’s budget, was welcome, but unlikely to stimulate a significant increase in sales.

“It is possible that the extended period of the higher threshold will be more of an incentive for first-time buyers to enter the market now that affordability has improved due to falling interest rates and house prices,” she said. “But it seems more likely that, for the most part, buyers will remain cautious as long as they think that prices will continue to fall.”

The government scheme to boost the availability of mortgages by offering guarantees for new mortgage-backed securities is also unlikely to make a big impact on the market, Earley said.

“Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further.

“Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise.”

Land Registry figures

Last month’s figures from the society took commentators by surprise and were almost immediately contradicted by rival lender Halifax, which reported a 1.9% fall in March.

Today, figures from the Land Registry confirmed that in many areas the market was still falling last month, although the pace of decline seemed to be slowing and some areas did see prices rise.

Its latest snapshot of the market showed that house prices dropped by 0.4% in England and Wales in March, the lowest monthly fall in 11 months.

The Land Registry index, which records the completed sales price of all homes that have changed hands at least once before, put the average price of a property in England and Wales at £152,895 – 16.2% less than in March last year and the same price as in August 2004.

However, it said that in London prices increased by 0.6% over the month, while in Wales prices rose by 1%. In the north-east and south-west house prices jumped by 1.1% and 1.8% respectively.

Michael White, chief executive of broker Email Mortgages, said it was no surprise to see the market falling again after last month’s shock rise.

“A return to a monthly fall in April seems to show the market was right to be cautious about any perception that house prices had reached their floor and were on the rise again.

“The 0.4% fall seems to reflect the majority of other indices which continue to show that UK house prices are still falling and will probably continue in the same vein for at least the rest of 2009.”

He added that lenders still needed to take “a much more borrower-friendly stance” before prices could start to rise again.

“At the moment, too many prospective purchasers are unable to get the mortgage finance they need to get on the property ladder – high loan-to-value products are still in short supply and until lenders feel confident enough to move up the risk curve and meet their responsibilities to these borrowers, we are unlikely to see any regular and sustained movement upwards in house prices for the foreseeable future.”

Ed Stansfield, property economist at Capital Economics, agreed the housing market correction was still some way from being over.

“Although the recent upturn in buyer interest may encourage sellers to hold out for higher prices, thus slowing the rate of house price falls over the next few months, ultimately the combined effect of rising unemployment and widespread pay freezes will mean that prices fall considerably further,” he said.

  • House prices
  • Property
  • Housing market
  • First-time buyers
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Money Making Programs – "They Just Want The Money"

Thursday, April 30th, 2009

Guest Post by Carael Knight

Warning: This article may strike a few as being “too direct” and if this offends you in any way, then this article is not for you but a lot of times, when people are looking for a way to make some extra CASH from home, they just want the money! From lotions and potions, juices, urbes and spices, to all the different products (stuff) that is basically “stuff” no one really wants or needs’, everyone gets involved in it for the money! This is the bottom line. They want something that is “cash driven”, period. They don’t care about the products they sell. They don’t want to talk to nobody, they don’t want to sell anything to nobody! They don’t want to persuade or convince anyone. They don’t have time to learn some nonsense training course that will take forever to learn and make money. 95 to 98 percent of the people who want to supplement their income and make extra cash need the money and they need the money right now “like yesterday”! They just want the money! They want CASH.

Money Talk 101: Lets Get To The Money!!!

I’ll make this clear so that any person with any logic can fully understand this concept. All of these $50, $100, $200, and even $400 programs are really meaningless! That’s right meaningless! The reason I say this is because in most money making programs, in order for you to actually make a substantial income, you have to sell a lot in volume. Whereas, with high ticket programs you can and will see profit with just a few signups! This is where you make some “REAL” money.

Another way you can and will make real money from home is through residual high ticket programs. For example, if you market a $500 – $3500 program, all you would really need to be in profit is 2 – 3 sales. Two sales at $500 is $1000 and/or two sales at $3500 is $7,000! This is where some “serious” money can quickly add up.

See The FREE video here.

: Lets Make Some “REAL” Money

Ten of the best … ways to cut the cost of pet ownership

Wednesday, April 29th, 2009

It’s tough times for pets too, as more and more are being abandoned by their cash-strapped owners. Hilary Osborne offers some tips on holding down the cost of caring for our furry friends

The recession is proving bad news for many pets. According to the RSPCA, a squeeze on household budgets has led to an upturn in abandoned animals with more than 30 pets a day being dumped by their owners.

While some people will find their budgets no longer stretch to accommodate a pet, there are ways to reduce the cost of caring for your furry friend.

1. Buy food in bulk

Cut the cost of pet food by as much as 50% by buying in bulk. Generally speaking, the bigger the package of food you can buy the cheaper it will be. At Sainsbury’s, for example, a 1kg bag of Iams cat food costs £4.98, while a 3kg bag weighs in at £13.38. Go online to Pet-supermarket.co.uk and you can order 15kg for £45.76 – that’s just £3.05 a kilo. It’s a similar deal with fish food. At Sainsbury’s 100g of Tetra Pond Floating Foodsticks costs £2.41. At Pet-supermarket 3kg of the food is on offer at £27.99 – that’s 93p per 100g. Even when the sticks are full price, at £42.99 for 3kg, that works out at £1.43 a 100g. (Use discount codes on Petsupermarket and you can cut the cost of a big shop by more.) Do look out for special offers, though, as sometimes these make it cheaper to buy smaller packs of food.

2. Choose a mongrel

If you haven’t yet got a pet but want one, don’t choose one that costs a fortune to buy and care for. A pedigree animal will not only cost more up front than one of less certain heritage, it could be more expensive to care for if it is breed that is prone to ill health too. Research done by Sainsbury’s Bank a couple of years ago suggested it could cost up to a third more a year to care for a pedigree pet than a moggy or mongrel. More recently, the bank has also compared the cost of treatment of various breeds of cats and dogs. It found rottweiler owners spend 60% more than owners of west highland whites on treatment, paying an average of £441 a time compared with £271. If you want a pure breed pet, you might want to find one that is cheap to treat.

3. Don’t rush to go to the vet

Clearly, if your dog has been run over you shouldn’t hang around, but minor ailments sometimes cure themselves. You wouldn’t visit the doctor at the first sign of a runny nose, so why seek expensive help as soon as your cat or dog sneezes? Research done by More Than suggests unnecessary emergency vet appointments cost UK pet owners £118m a year, made up of vets’ fees, travel costs and lost annual leave.

4. … but keep jabs up to date

Paying to get your pet vaccinated against nasty illnesses means a hit on your wallet every year, but not doing so could prove a false economy. If your animal falls ill with something it could have been vaccinated against and you don’t have insurance, you could end up paying far more than the price of the jabs. And even if you do have insurance, some policies will refuse to pay out if an illness could have been prevented with vaccination.

5. Go online for cheaper medication

Instead of buying lotions and potions from the vet, order them online. Websites like Bestpet.co.uk sell prescription and non-prescription medicines for up to 50% less than the price you will usually pay. The flea treatment Frontline For Cats, for example, costs £18 on the site – at least £10 less than at most vets, and p&p is free. Another site, Petremedies.co.uk, offers vouchers for £3 off purchases of £20 or more if you subscribe to its mailing list.

6. Buy pet insurance

One of the most expensive parts of having a pet can be caring for it if it falls ill or has an accident. According to figures from the RSPCA, almost 50% of UK pets will require treatment at some point this year at an average cost of £220. Pet insurance covers you against some of the costs of emergency trips to the vet, as well as offering a pay out if your pet needs ongoing treatment. Many policies also include legal expenses if your pet causes injury to a third party – for example, should your dog bite the postman – the cost of advertising if you lose your pet and the cost of a reward for its return. It’s an extra cost each month, or year – depending on how you choose to pay for your policy – but could save you hundreds of pounds in the long run.

7. … and shop around for it

Premiums are based on the type of pet you have, its age, where you live and other factors that will determine how likely it is to get lost or fall ill. But there can be a massive difference in how much you are charged. For example, Animal Friends quotes £76.34 a year to cover a one-year-old moggy living in Holmfirth in Yorkshire, while M&S quotes £91.68 for the same pet. As with other types of insurance, you could be able to cut your premiums by taking on a bigger excess. The best way to compare deals is to use a comparison site like ours. But make sure you read the small print as the cheapest policy might not offer the best deal. Some policies cover an ailment for 12 months only, or limit the amount they will pay out. If your pet is prescribed medication for the rest of its life, you could be picking up the tab when the cover runs out, so it may be worth paying slightly more for a policy that offers ongoing cover.

8. Form a cat-sitting circle, or get a house-sitter

The cost of getting someone in to feed your pet while you’re away can be sky-high, with some cat-sitters charging £15 a day to feed and spend “quality time” with your pet. Instead, find friends and neighbours who also have pets and help each other out. If you are going on a longer holiday, consider getting a housesitter in. Using a professional service such as Homesitters.co.uk will probably only be cheaper than kennels if you have more than one animal, but they will make your home looked lived in and so less attractive to burglars.

9. Buy toys and bedding from the charity shop

You don’t need to buy expensive toys for your pet. Sad-looking toys at carboot sales or in charity shops are a cheap alternative to expensive pet toys. Similarly, rather than buying purpose-made blankets and towels for pets, buy secondhand items or recycle your own. Your dog is unlikely to object to being dried down with a greying, fraying bath towel you no longer want hanging in your bathroom.

10. Have your pet spayed/neutered

Make sure you don’t end up with more mouths to feed by taking steps to prevent your animal reproducing. (Obviously, this is one for larger pets, not the likes of goldfish.) If you are on a low income, you might be able to get a subsidy. Cats Protection offers financial assistance with neutering to cat owners who are full-time students or on means-tested benefits, while the Blue Cross offers subsidised treatment for pets whose owners are on benefits, extending beyond neutering and spaying.

  • Family finances
  • Pet insurance
  • Consumer affairs
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Student loan defaulters given black marks

Wednesday, April 29th, 2009

Student Loan Company says it will start reporting missed payments to credit rating agencies

Thousands of struggling graduates could find it harder to obtain a credit card, loan or mortgage after the Student Loans Company (SLC) said it would start reporting late payers to credit reference agencies.

Until now, graduates who took out their loan before 1998 have not had missed payments recorded on their credit files, even if they defaulted regularly. However, on 15 April the SLC was given the right to alert the likes of Experian to missed payments.

The SLC said 341,000 graduates had an outstanding balance on a pre-1998 loan, and it is writing to 60,000 of these who are overdue warning them they risk a default notice.

It stressed this measure was a last resort and said it would contact borrowers first and give leeway to those who are genuinely struggling. However, the company warned that if late-paying borrowers fail to get in contact within 28 days of it writing to them, a black mark could be applied to their name.

The impact could be huge: a note on a credit file can be seen by other lenders when someone applies for credit. Since the credit crunch took hold lenders have tended to favour those with spotless repayment histories, and just one missed payment could scupper a person’s chances of getting a credit card or loan.

Those who are cleared for a loan may find themselves paying significantly higher interest than someone with no recorded missed payments.

In a statement the SLC said: “We contact customers to pursue arrears, and as part of this work we will now be sending letters to those who are consistently failing to repay, requesting they contact us within 28 days.

“Customers who engage with the Student Loans Company and make suitable arrangements to repay or to defer repayments will not face court action for as long as they keep to their agreed repayment plan.

“After this date, unless there are extenuating circumstances, customers who have not deferred and are not meeting their repayment obligations will be registered with UK credit reference agencies.”

The deterrent on pre-1998 loans does not affect those who defer payment – an option available to those who earn less than £25,936 a year.

Those who took out loans after 1998 are unaffected; their payments are usually deducted directly from their pay.

  • Student finance
  • Borrowing & debt
  • Credit cards
  • Personal loans
  • Students
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