Consumers unknowingly stung by recurring charges

Bee

A recent report has shown how many consumers in the United States are being stung by charges that are being taken from their accounts or cards in the form of recurring charges. Many people do not even realize that the money is being taken out of their account and are then ending up over their limits and are hit by further charges by banks and credit card issuers.

This problem is made worse by the fact that many of those who are having money taken from their account in this way do not keep a close eye on their statements, which means that it a lot of time may pass before they realize that the money is being taken from their account.

Many people have money taken from their accounts and cards in the form of recurring charges due to things such as subscriptions, memberships, and even when they sign up for free trials where they give their financial details when signing up for the trial.

Once the free trial period is over the companies start charging the standard fee for the goods or services and many customers don’t even know that money is being taken until it is too late. Even though most of these companies state that you can cancel within the trial period or at any time, a lot of people tend to forget to do this and therefore end up being charged.

Check statements and subscriptions

Officials are now urging consumers to check their credit card and bank statements carefully each month to see whether any recurring charges are being taken, as they can then tackle the issue before it spirals out of control and before more money is taken.

In addition, consumers should go through and cancel all subscriptions that they no longer need or use, as even though they may not be using them the charges may still be going through because they have not cancelled them.

A survey that was carried out earlier this year showed that these charges were a major cause of concern for many consumers, with 40 percent of those polled stating that they found them to be a big problem. Many even found that there were charges being taken for subscriptions and memberships that they had actually cancelled, was then leaving them seriously out of pocket through no fault of their own.?

Irish households deep in debt with payday lenders and loan sharks

Loan Shark

When examining the global economy, we identify the fact that governments have gone into unprecedented levels of debt since the financial crisis. When we look even closer, we can determine that consumers are more indebted than ever before. No matter what part of the globe you are, there are plenty of households that are suffering from immense levels of debt.

This troublesome debt level is leaving many “vulnerable” to payday loans and loan sharks, says Tom Healy, director of the Nevin Economic Research Institute (NERI).

According to a new report, Irish households are facing huge amounts of debt. To put it into context, Ireland ranked No. 12 out of 24 of Organization for Economic Cooperation and Development (OECD) nations in household debt back in 2001. Today, however, Ireland has reached the third spot, ranking behind Denmark and the Netherlands, and just behind Norway.

Using OECD data, Irish household debt as a percentage of disposable household income exceeded 200 percent in 2014. This is much higher than the Irish government debt to GDP ratio of around 100 percent a year ago. Unfortunately, Irish households are facing substantial risks, Healy referred to it “as dangerous.”

“The trend in household debt since 2001 shows a pre-recession peak of 236% of net personal disposable income in 2007, up from 111% in 2001, which was probably well above the average in the previous decade,” said Healy. “In simple terms, a representative Peadar and Elizabeth Murphy-Smith with a combined debt of ?33,000 in 2001 [and] a combined income of ?30,000… six years later their combined debt had jumped to, say, ?120,000, while their income had risen to say ?50,000.”

Ostensibly, Irish consumers are engrossed in acquiring property because of easy money and low interest rates. As the boom continues and consumers receive higher wages and rising property values, households are overextending themselves. When a member of the household loses their job, experiences a pay cut or becomes ill, a major source of income is lost in the fragile home.

“When the property market collapsed in 2008-2010, along with a sudden stop in inter-bank lending, many households were straddled with huge amounts of personal debt in the form of mortgages which they were not able to service,” he said. The scale of mortgage distress rose sharply as many were forced into restructuring or non-payment.”

If such a collapse were to transpire and interest rates were to rise then many households would be very much vulnerable. Many consumers would be forced to dive into the “shadow world” that consists of payday loans online and loan sharks with very high interest rates. This is especially true for impoverished households.

Essentially, Irish consumers need to rein in their spending and try to limit their debt intake. If not, then they could be prompted to take out a payday loan and perhaps go deeper into debt.
Although it’s a cautionary report in Ireland, many jurisdictions all over the world are suffering from the same fate. Oil-rich nations and states have experienced thousands of job losses, which then cause households to go into the red, lose their house and even take out payday loans. Regions that were once prosperous are now victims of the collapse in oil prices.

When there’s huge volumes of financially distressed consumers, payday loans become the alternative financial option to turn to.

Big spenders should consider a spending diet

Tired Fat Woman

A recent report highlighted how many people in the United States are spending far more than they can afford to, particularly in cases where they want to portray themselves as having a more luxurious lifestyle than they do have. Many were found to be splashing the cash on luxury items that they did not really need simply to keep up with friends and neighbors, and in some cases they were getting themselves into thousands of dollars of debt in order to fund this type of extravagant lifestyle.

Officials have now said people need to start thinking about their financial health in addition to their physical health. One report suggested that people need to take the same stance as they do when they go on a diet in order to lose weight and improve health. Officials said that many people also needed to consider going on a spending diet so that they could improve their financial health in the same way as they go on a traditional diet to improve their personal health.

Cut costs wherever possible

Experts have said that consumers can trim down on their spending and enjoy enhanced financial health by taking some simple steps. One of the key things that they need to do is reel in expenditure on items that are not necessary or essential. In most cases, this is simply wasted money which many people cannot afford to lose. This can go a long way towards both avoiding and relieving debt problems.

Another thing that consumers should do is make sure that they come up with a strict budget and then stick to it. There is plenty of software and many apps that can be used in order to make household budgeting easier and in order to make this effective it is vital that all outgoings and income is logged in the same way as a normal dieter would log things such as calories consumers and calories burned off by exercise.

While logging outgoings and income, consumers should also take the opportunity to try and trim their spending by cutting out any unnecessary costs. This could be things such as magazine subscriptions or other luxuries that are not essential. Trying to reduce costs on things such as bills will also help to trim and streamline spending for American households, which means that they will benefit from more disposable income, be able to avoid getting into unnecessary debt, and in some cases even be able to put some money aside into savings.