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- Match the money whizzkids
from This is money/Daily MailMANY children returning to school this week will get their first taste of personal finance education. More than 2,000 students in over 100 schools and colleges in England and Wales are already studying the equivalent of GCSEs and A-levels in personal finance on a course set up by the Institute of Financial Services (ifs). And this number is set to rise dramatically. The course first hit schools and colleges last year, covering banking, saving, borrowing, tax and National Insurance, with 60 hours of study in the Foundation paper.
This month the Intermediate Certificate, the second component of the qualification, kicks off. It's an essential subject for youngsters if they are going to make the most of their money and avoid the HYPERLINK "javascript:self.name='main';PopUp('you_popup','/pages/jargon/index.html?in_jargon_term=mis-selling','350','150')" mis-selling and debt traps suffered by many of their parents' generation.
Research suggests classes on personal finance and budgeting in schools can lead to a couple with two children being on average £32,000 wealthier by the time they reach their 30s and 40s.
The Institute for Public Policy Research carried out its study in the U.S., where children are taught basic finance skills. But personal finance education in the UK remains mainly down to the whim of a school's headteacher. The ifs exam is available only in schools that choose to take it up, and compulsory education on the subject remains pitiful. The Qualification and Curriculum Authority (QCA) is introducing units to cover money, saving and spending as part of the Personal, Social and Health Education & Citizenship classes in schools this month.
Meanwhile, under an initiative known as Learning Money Matters, which has been set up by City watchdog the Financial Services Authority and which is due to start in September 2008, basic finance skills will be taught as part of the maths GCSE. But critics say this is inadequate as it provides only seven-and-a-half hours of study over two years. Most adults had to pick up financial skills in life as they borrowed, saved and spent. So here's your chance to test yourself with some basic questions from the two exam papers. - U.K. Banks' Unsecured Bad Debts Set to Increase, Says S&P
U.K. banks may see an increase in unsecured bad debts in the ``short term'' as consumers find it harder to repay credit amid rising living costs and after insolvency rules introduced two years ago made defaulting less onerous, said credit analysts at Standard & Poor's Rating Services.
``Unsecured impairments are likely to climb further,'' said the London-based analysts led by Nick Hill in a statement. ``Competition is likely to restrain any attempt to increase margins to compensate for the additional risk.''
Rising energy costs and interest rates and rules making it easier to negotiate so-called individual voluntary arrangement orders among those who default, have driven up unsecured bad debt by 70 percent in the last two years among the U.K.'s biggest banks, said the analysts.
Pretax profit at the U.K. units of seven British banks including HSBC Holdings Plc rose by an average of just 2 percent in the first-half of this year. Overall profits at the five biggest lenders climbed 22 percent, driven by overseas lending and corporate banking, said the analysts.
Lloyds TSB Group Plc, the No. 1 provider of unsecured loans in the U.K., ``has the greatest sensitivity to a further deterioration'' in consumer bad debts, said the analysts. A 50 percent increase in its bad-debt charge could reduce pretax profit by 18 percent. On the same measure, Barclay's profit would drop 11 percent and HSBC's 3 percent, the analysts said.
Debt Growth Slowing
The pace of growth in bad debts is expected to slow as banks have tightened their lending criteria. Still, ``indebtedness in the U.K. is unlikely to decline quickly,'' the analysts said. Prospects for growth in unsecured lending are ``low'' due to pressure on fee income, as the U.K.'s Office of Fair Trading's probes so-called payment-protection insurance, which is sold on loans and credit cards.
U.K. household debt is at a record 1.19 trillion pounds ($2.3 trillion), the bank of England said in May. Individual insolvencies in England and Wales rose in the second quarter to the highest since records began in 1960. - Sun, sand & spending: holidaying Brits hit borrowing high
As summer draws to an end, for many Britons the anticipation of a well-earned break has been replaced with the anxiety of paying for it all. A sixth (15 per cent) of British holiday makers admit to borrowing money to pay for their holidays this summer, according to the latest Personal Credit Index from CreditExpert, the online credit monitoring service from Experian.
By far the most popular form of finance is a credit card, with 14 per cent of holiday makers choosing to pay for their holiday using this method, while one in 10 (10 per cent) had no idea how they were going to pay for their fortnight in the sun before they set off. A third (33 per cent) of those who used a credit card to pay for their summer holiday say they don’t expect to repay the borrowed amount at their next statement, reveals the CreditExpert/Ipsos MORI research, which polled c2,000 adults across Great Britain in June and July of this year. Some 14 per cent estimate it will take them four to six months to pay off their holiday credit card bill, meaning they could still be paying interest on the debt at Christmas. Two per cent expect to still be paying off the cost of this holiday in a year’s time.
Heat is on as credit confidence drops Personal credit confidence has seen a three point drop – from 101 in the second quarter of this year, to 98 in the third quarter, according to the CreditExpert Personal Credit Index, which tracks consumers’ current credit confidence and future expectations on a quarterly basis. The impact of holiday costs may have contributed to this fall, together with rising fuel and energy prices and other seasonal effects. The number of borrowers who are uncomfortable with their level of borrowing has risen by two percentage points over the third quarter of 2006, to 15 per cent, reflecting this overall drop in credit confidence.
Yet despite this, the vast majority of borrowers (76 per cent) still say they are comfortable with their current level of borrowings. Among those with multiple credit holdings (defined as three or more credit cards or loans and a mortgage), a third (34 per cent) said they were uncomfortable with their debt in June – compared to just 18 per cent in April, clearly showing the impact of this drop in confidence. On borrowed time More than a quarter (27 per cent) of borrowers say they expect their level of borrowing to decrease over the next six months, compared to 30 per cent in the second quarter of the year – a three percentage point drop in only three months.
“Getting carried away and overspending a little on holiday is something nearly everyone has experienced, but the latest Personal Credit Index reveals a worrying picture of people failing to budget for their holiday costs or plan their repayments, meaning they could be repaying holiday borrowings well up to and beyond the Christmas period,” says Jim Hodgkins, Managing Director of CreditExpert.co.uk. “Being constantly aware of your financial situation can help you plan your future spending better and ensure that high periods of spending, such as holidays, don’t leave you struggling for the rest of the year.
An online credit monitoring service, such as CreditExpert, provides a summary of your financial situation so it can help you get your finances in order before planning any further spending. It will also alert you to any changes in your credit report which could have an impact on your future financial plans.” - Debt court judgments soar
THE number of debt judgments issued by the UK County Courts has soared, jumping by its highest number for 16 years.
County Court Judgments brought by lenders against people who haven't paid their debts hit 165,000 in the three months from the beginning of April to the end of June. The figure was up by 25,000 on the same period in 2005 – the largest year-on-year increase since the start of the recession in 1990. According to the Registry Trust, the body behind the figures, lenders were attempting to recover £500m worth of debt by going to the courts. Registry Trust chairman Malcolm Hurlston said: 'The rise in the number and value of consumer CCJs is proof of their [the lenders] concern